Benchmarks to make slightly negative start of the new week

Indian markets ended higher for second straight session on Friday as investors cheered major announcements in the interim budget presented in Parliament. Today, the start of the new week is likely to be slightly in red, as investors will be looking ahead to the first Reserve Bank of India (RBI) policy meeting under the new governor later in the week. There will be some cautiousness with Moody’s Investors Service’s statement that the government will find it difficult to meet the fiscal deficit target of 3.4% in 2019-20 on account of higher spending and low revenue growth. Observing that Indian government's debt is stubbornly high as a percentage of GDP, Moody's said it could be brought down only if the Centre sticks to the fiscal consolidation path. Traders will be concerned about a report that Foreign Portfolio Investors (FPIs) withdrew over Rs 5,300 crore from the Indian capital markets in January, indicating their wait and watch approach ahead of the general election. Also, traders will be reacting to report that the government has reduced the allocation for Startup India programme in the Budget 2019-20 but added more monies to the Make in India kitty. According to the budget documents, the allocation for Startup India programme has been slashed to Rs 25 crore for 2019-20 from the revised estimate of Rs 28 crore in 2018-19. Meanwhile, Fitch Ratings said pre-election spending has led to fiscal slippage by a modest margin but the sovereign rating profile of India would be evaluated based on the medium term outlook in the post-election Budget. However, traders may get some support later in the day with the finance ministry’s statement that GST collections in January rose to Rs 1.02 lakh crore - the second highest monthly mop-up after April. The total number of sales return or GSTR-3B filed for the month of December up to January 31, 2019 is 73.3 lakh. Traders may also take note of Federation of Indian Export Organisations’ (FIEO) saying that the new logistics portal and upcoming national policy would help boost the country's export growth. There will be buzz in the oil industry stocks with report that state-owned oil firms' capital expenditure has hit a four-year low with PSUs such as ONGC and IOC planning to invest Rs 93,693 crore in oil and gas exploration, refining and petrochemicals in the 2019-20 fiscal year. There will be some reaction in the stocks related to construction equipment sector with report that the growth of construction equipment sector has hit a bumper after liquidity crisis gripped NBFCs following the IL&FS default. As per the report, the construction equipment sector was growing around 20% prior to the IL&FS crisis. The growth has now slowed down to 10%.

The US markets ended mostly higher on Friday after the US created more jobs than expected in January. Asian markets were trading mostly in green on Monday following strong US economic data and positive comments out of Washington on the trade talks.

Back home, Indian equity benchmarks lauded the Interim Budget 2019 on Friday, with Sensex and Nifty closing the trading session with the gains of over half a per cent each. The start of the day was positive, as the government revised India’s gross domestic product (GDP) growth rate upwards by 50 basis points to 7.2 per cent from 6.7 per cent for fiscal 2017-18 and by 110 basis points to 8.2 per cent from 7.1 per cent for 2016-17. Adding enthusiasm among the market participants, the Finance Ministry said that revenue collection from Goods and Services Tax (GST) in the month of January 2019 surpassed Rs 1 lakh crore-mark, after a gap of 2 months. It noted that this has been a significant improvement over collection of Rs 94,725 crore during December 2018 and Rs 89,825 crore during the same month last year. Sentiments remained upbeat, aided by rising manufacturing PMI data. The Indian manufacturing sector surged in the month of January, with the quickest increase in order books. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 53.9 in January from 53.2 in December. The manufacturing sector activity expanded for the 18th consecutive month as the PMI reading stood above the watershed 50 mark, which differentiates growth from contraction. The markets extended their gains in noon deals, as Finance Minister Piyush Goyal started presenting the budget in the Parliament. Goyal said that India has emerged as the brightest spot in the world in the last five years during which the country witnessed the fastest GDP growth higher than under any previous governments. Separately, the Finance Minister proposed higher allocation for MNREGA by 9 percent to Rs 60,000 crore for the financial year 2019-20, as a part of the NDA government's larger plan to focus specifically on the country's rural sector, amid concerns over rising agrarian crisis. However, in the last leg of the trade, the key indices pared some their gains, amid reports that the growth of eight core infrastructure industries slowed down to 2.6 percent in December 2018, on account of negative growth in expansion of crude oil, refinery products and fertilisers. According to data released by the ministry of Commerce and Industry, the combined Index of eight core industries stood at 132.1 in December, 2018. Finally, the BSE Sensex gained 212.74 points or 0.59% to 36,469.43, while the CNX Nifty was up by 62.70 points or 0.58% to 10,893.65.