Benchmarks to make pessimistic start; macro-economic data eyed

Indian markets continued their southward journey for third straight session and ended with a cut of around half a percent each on Monday as investors fretted over global uncertainties and lackluster quarterly earnings. Today, the markets are likely to make pessimistic start ahead of macro-economic data and new round of Sino-US trade talks. Market-men will be eyeing the macro economic data of industrial production and consumer price inflation to be released after the market hours. There will be some cautiousness with the Agricultural & Processed Food Products Export Development Authority’s (Apeda) data showing that India's exports of agricultural commodities nosedived by up to a staggering 46 per cent in volume terms due to supply glut in the international market which prompted stockists to defer their purchase plans amid expectations of further price fall. However, traders may get some support with Electronics and IT Secretary Ajay Prakash Sawhney’s statement that new schemes introduced by the government will focus not only on manufacturing of electronics in India, but also positioning the country as an export hub. Besides, a pledge by India to reduce trade imbalance through greater crude imports, US firms’ concerns on the new e-commerce policy and retaliatory tariffs imposed by both nations will dominate the agenda on February 14, when officials sit down for the India-US Commercial dialogue. Meanwhile, in order to check excessive price movements, capital markets regulator SEBI proposed a slew of measures including capping the maximum daily movement of up to 20 per cent for all stocks including that are part of the future and options (F&O) segment. SEBI also granted relaxation to non-residents such as NRI, PIOs, and foreign nationals from furnishing a copy of PAN card and allowed them to transfer equity shares held by them to their immediate relatives. There will be some buzz in the banking sector stocks with report that the government is not considering any other merger proposal in public sector banks at the moment as it would wait for completion of the amalgamation of Dena Bank and Vijaya Bank with Bank of Baroda (BoB). There will be some reaction in infrastructure stocks with rating agency India Ratings & Research maintain a stable outlook on India’s road and aviation sector for the financial year 2019-20. According to the report, the agency expects the infrastructure sector to remain stable in FY20 on the back of stable economic growth. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended mostly higher on Monday, led by industrial companies. Asian markets are trading mixed on Tuesday with investors looking to a new round of Sino-US trade talks as the world’s two largest economies try to resolve a tariff dispute that has put a dent on global growth and corporate earnings.

Back home, key Indian equity markets ended the Monday’s trading session with the notable losses of more than 0.40% each. The markets made a negative start of the week and remained bearish throughput the day, as the International Monetary Fund (IMF) warned governments to gear up for a possible economic storm as growth undershoots expectations. It said the bottom-line they see an economy that is growing more slowly than they had anticipated. Adding some worries among the traders, Economic Affairs Secretary Subhash Chandra Garg said that the country actually faces shortage of capital more than the scarcity of jobs. Domestic sentiments also got hit with a private report stating that India could lose a vital US trade concession, under which it enjoys zero tariffs on $5.6 billion of exports to the United States, amid a widening dispute over its trade and investment policies. However, towards end of the session, markets managed to come off their intraday low points, tracking firm European markets. The market participants got some relief with a survey of the Federation of Indian Chambers of Commerce & Industry (FICCI) stating that higher production and a better growth outlook have instilled confidence in manufacturers in the October-December quarter of 2018-19 for ramping up hiring. Adding support, Prime Minister Narendra Modi exuded confidence that India would continue to be the fastest-growing large economy, and could be the second-largest economy in the world by 2030. Some comfort also came after the commerce ministry stated that India's exports to China has reached $12.7 billion during April-December 2018 on account of growth in shipments of marine products, chemicals, plastics, petroleum products, grapes and rice. Finally, the BSE Sensex fell 151.45 points or 0.41% to 36,395.03, while the CNX Nifty was down by 54.80 points or 0.50% to 10,888.80.