Benchmarks likely to make optimistic start ahead of interim Budget 2019

Snapping four-day losing streak, Indian markets ended significantly higher on Thursday tracking strength in Asian peers as a dovish stance by the Federal Reserve boosted sentiment. Today, the start is likely to be optimistic, on the day of interim Budget 2019, on the back of supportive global cues. Investors will be eyeing manufacturing PMI data to be out later in the day. There are expectations that Budget may focus on an income support scheme for distressed farmers who have seen their incomes stagnate because of plunging prices, barely enough to pay for loans and input costs. Traders will be getting encouragement with the finance ministry’s statement that revenue collection from Goods and Services Tax (GST) witnessed a substantial jump, crossing Rs 1 lakh crore in January from Rs 94,726 crore in December. It said this increase has been achieved despite various tax relief measures implemented by the GST Council to lower the tax burden on the consumers. Meanwhile, the government revised the Gross Domestic Product (GDP) growth rates by 110 basis points from 7.1 per cent to 8.2 per cent for 2016-17 and by 50 basis points from 6.7 per cent to 7.2 per cent for fiscal 2017-18. However, some cautiousness may be there as growth in the eight core sectors of the economy continued to tumble, crashing to an 18-month low of 2.6 per cent in December, down from the 3.4 per cent growth in November. There will be some buzz in the aluminium industry stocks with Union Mines Secretary Anil Mukim’s statement that the Indian aluminium industry must slash production costs and raise output to tackle the global downturn. The auto sector stocks will also be in action, reacting to their monthly sales numbers. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended mostly higher on Thursday as strong earnings and a Federal Reserve indicating it will pause rate hikes caused boosted investors sentiments. Asian markets are trading mostly in green on Friday on the back of optimism on the US-China trade front.

Back home, bulls took charge on Dalal Street on Thursday, as both Sensex and Nifty, ended the trading session with the strong gains of over 1.50% each. The markets made a fabulous start of the day, after SBI Research’s latest report indicated that the government is likely to meet the fiscal deficit target this year and pegged fiscal deficit at Rs 6.72 trillion or 3.2% of gross domestic product (GDP) for next fiscal year (2019-20), assuming a moderate nominal GDP growth of 11.7%. It added that the fiscal gap will be met at the budgeted 3.3 percent for FY19. Traders took encouragement with Commerce Minister Suresh Prabhu’s statement that the government will release the new e-commerce policy soon which is awaiting approval from the Department of Industrial Policy and Promotion (DIPP). The street also took note of report that Indian companies’ foreign borrowing nearly trebled to $3.81 billion in December 2018 as compared to the same period last year. According to data from the Reserve Bank of India (RBI), of the total borrowing amount in December, $3.77 billion was mobilized through external commercial borrowings (ECBs) in the overseas markets, while $37.04 million was through rupee-denominated bonds (RDBs). The markets extended their gains in the second half of the session to settle near their intraday high points, mirroring positive European markets. Intense buying by the traders ahead of expiry of January futures & options contracts, also contributed to the gaining momentum. The markets participants were seen taking support from a report that the GST officials are working out mechanism to prompt taxmen to initiate profiteering complaints, which could be taken up for further investigation by the Directorate General of Anti-Profiteering. The street paid no heed towards the National Sample Survey Office’s (NSSO) latest report showing that India's unemployment rate reached to 6.1% in 2017-18, hitting a 45-year high. The rate was the highest since 1972-73. Investors also shrugged off Fitch Ratings’ latest report warning of a second consecutive year of fiscal slippage in the event of Finance Minister Piyush Goyal resorting to populist spending to win over lost vote base. Finally, the BSE Sensex gained 665.44 points or 1.87% to 36,256.69, while the CNX Nifty was up by 179.15 points or 1.68% to 10,830.95.