Markets to make cautious start ahead of RBI monetary policy decision

Extending gains for fifth straight session, Indian markets ended near intraday high levels on Wednesday, as investors’ sentiment was buoyed by a slew of upbeat quarterly results. Today, the markets are likely to make a cautious start ahead of the Reserve Bank of India's (RBI) monetary policy decision amid mixed global cues. The RBI is likely change its monetary policy stance to neutral from calibrated tightening at its Monetary Policy Committee meeting outcome. However, traders may take some support later in the day with Moody's Investors Service’s statement that the direct cash transfer programme for farmers and tax relief steps for the middle-class will give a fiscal stimulus of about 0.45 percent of GDP, and support growth through increased consumption, though at a fiscal cost. Some support may also come with a report that the government has allowed export of bio-fuels from special economic zones (SEZs) and export-oriented units (EoUs) with certain conditions, according to a notice of the directorate general of foreign trade. In August 2018, the government imposed restrictions on export of bio-fuels for non-fuel purposes. Besides, the government has decided to raise additional Rs 36,000 crore through dated securities to fund its expenses during the current financial year. Meanwhile, the union cabinet approved a Bill to set up a unified authority for regulating all financial services in international financial services centers (IFSCs) in the country. There will be some buzz in the power sector stocks with report that the government gave its nod to a proposal for setting up 12,000 MW grid-connected solar photovoltaic (PV) power projects with an estimated viability gap funding of Rs 8,580 crore. Also, there will be some reaction in broadcasting sector stocks with report that rubbishing claims that the new broadcast tariff regime would increase bill amounts of cable TV and DTH subscribers, the Telecom Regulatory Authority of India (Trai) said the new framework may actually decrease TV bills. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended lower on Wednesday as investors weighed corporate earnings against persistent concerns over trade and another government shutdown. Asian markets were trading mostly in green on Thursday as regional investors began to return from their Lunar New Year break, though Tokyo edged lower after a negative lead from Wall Street.

Back home, Indian equity benchmarks ended Wednesday’s trading session near their intraday high points. The start of day was positive, with the finance ministry expecting economic growth to accelerate to 7.5% in 2019-20 from 7.2% projected for the current fiscal. Domestic sentiments also got cheer, after the UN Conference on Trade and Development (UNCTAD) latest report said 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. As per the report, US and China's tariffs will divert trade to other countries, with this India is likely to see rise of 3.5% in exports, while the European Union will be the biggest winner. Adding some optimism among traders, the Minister of Petroleum and Natural Gas & Skill Development and Entrepreneurship Dharmendra Pradhan said that India has emerged as a bright spot in the global economy in the recent years. He also added that with strong economy and supportive policy environment, the Government remains committed to inclusive, holistic and sustainable high economic growth. Rally continued on the street in the second half of the session, amid report that Commerce Ministry met Export Promotion Councils to discuss various issues being faced by exporters and examine ways by which India’s merchandise exports may reach $ 325 billion by March 2019. Positivity remained among the investors with a report stating that the income tax e-returns filed for the April-January period has grown by over 37 percent compared with the corresponding period in FY18. While over 6.3 crore taxpayers filed returns in the first ten months of the fiscal, the government is expecting 7.6 crore returns to be filed by the end of FY19 compared with 6.9 crore in FY18. Traders overlooked the International Monetary Fund’s (IMF) statement 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. The market participants also paid no heed towards a private report stating that the Indian rupee is set to underperform against the dollar again this year, weighed down by uncertainty ahead of a national election in May, but is unlikely to retest life-time lows. Finally, the BSE Sensex gained 358.42 points or 0.98% to 36,975.23, while the CNX Nifty was up by 128.10 points or 1.17% to 11,062.45.