Benchmarks likely to make positive start

Indian benchmark indices ended Tuesday’s range bound session with minor gains as investors avoided big bets due to the three-day Reserve Bank of India’s (RBI) Monetary Policy Committee meeting got under way. Today, Indian markets are likely to make optimistic start, mirroring positive cues from its Asian peers. Traders will be getting some encouragement with the finance ministry expecting economic growth to accelerate to 7.5% in 2019-20 from 7.2% projected for the current fiscal. There will be some support as the government expressed hope that the country's exports that are currently growing at 10% will maintain the pace this fiscal. Commerce Secretary Anup Wadhawan said trade deficit is not going to be a matter of any worry. Traders may take note of the United Nations’ latest report that India is among the several countries that stand to benefit from the ongoing trade tensions between the world's top two economies - the US and China. Besides, the International Monetary Fund said that greater efforts will be needed to reduce the fiscal deficit as the interim budget envisages a slower pace of fiscal consolidation than previously planned. It added in that regard, further steps to increase GST compliance will be critical to reach budgeted revenue goals. Meanwhile, capital markets regulator SEBI has asked exchanges to step up their surveillance of intra-day trading in the wake of significant volatility in a few stocks. The stocks under the scanner include those of a troubled airline, a media conglomerate facing liquidity crunch, a finance company under lens for alleged payment defaults, a pharma major being probed for insider trading and other violations as also a mining-to-infrastructure major. There will be some buzz in the banking sector stocks with India Ratings’ report that around Rs 3.5 lakh crore or 3.9% of the stressed corporate loans continue to remain unrecognised on the books of banks and nearly 40% of them may become dud assets by September 2020. Also, there will be some reaction in broadcasting industry stocks with  Crisil’s report that the new tariff regime by the Telecom Regulatory Authority of India (TRAI), which came into effect on February 1, may put the control of TV viewing in the customers' hand, but is also likely to increase their monthly bill and it will benefit popular channels. There will be some important result announcements to keep the markets in action.

The US markets ended higher on Tuesday, as stronger-than-expected earnings reports from some consumer discretionary companies. Asian markets were trading in green on Wednesday as investors waited to see if US President Donald Trump drops any hints of progress on tariffs in his State of the Union speech.

Back home, Indian equity benchmarks managed to eke out slender gains on Tuesday, with Sensex and Nifty settling above their crucial psychological levels of 36,600 and 10,900, respectively. After a cautious start, the markets traded volatile, as fiscal deficit or gap between Government's expenditure and revenue exceeded to Rs 7.01 lakh crore during April-December of the current financial year (FY19) and touched 112.4% of the full-year Budget Estimate (BE) of Rs 6.24 lakh crore on the back of lower revenue collections. Adding more anxiety among the traders, Moody's Investors Service said that fiscal slippage from the budgeted targets for the past two consecutive years and tax cuts and spending ahead of the general elections, is credit negative for India. Domestic sentiments also got hit after India’s services sector activity cooled for the second straight month in January amid the weakest upturn in new work since last September. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index slipped to 52.2 in January from 53.2 in December. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - remained unchanged at 53.6 in January. However, in the second half of the session, the key indices managed to keep their heads above water, aided by S&P Global Ratings’ statement that falling inflation and declining global crude oil prices have created space for the Reserve Bank of India (RBI) to cut interest rates. The RBI is scheduled to announce its sixth bi-monthly policy review for the fiscal on February 7. Separately, SBI Research report stated that the Reserve Bank may cut key lending rate by 0.25 per cent later this week in view of benign inflation. Some relief also came with the think tank vice chairman Rajiv Kumar’s statement that the Niti Aayog is open to the idea of having a role in fund allocation to states for developmental expenditure and would discuss the matter with the 15th Finance Commission. The street reacted positively to Union Commerce Secretary Anup Wadhawan’s statement that the country's exports in the current fiscal year are expected to surpass the earlier peak of $314 billion in 2013-14. The achievement comes against the backdrop of a very challenging global environment. The exports, in general, have been growing almost consistently for the last three years. Traders were seen taking note of report that government sought Parliament's nod for gross additional expenditure of Rs 1,98,831.36 crore during the current fiscal ending March. Finally, the BSE Sensex gained 34.07 points or 0.09% to 36,616.81, while the CNX Nifty was up by 22.10 points or 0.20% to 10,934.35.