Markets to make positive start amid strong macro-economic data

Late hour sell-off mainly dragged the Indian markets near their intra-day low levels to end Tuesday’s trading session with massive losses, even as global cues remained positive. Today, the start of the session is likely to be positive mirroring firm global cues coupled with strong macro-economic data. The Central Statistics Office’s (CSO) data showed that India's Consumer Price Index (CPI)-based inflation for the month of January 2019 eased to a 19-month low at 2.05% over the previous month on continued decline in food prices, including vegetables and eggs, while industrial production in December 2018 bounced back to 2.4% after sliding to a 17-month low in November. Traders will be getting encouragement with Finance Minister Piyush Goyal stressing that tax concessions have been provided with a view to help poor and middle class people living on a tight budget, said now individuals earning up to Rs 9.5 lakh can escape liability by taking advantage of saving schemes. The Minister also said he did not propose any change in the tax rate but only provided few rebates which will boost spending and help the economy. However, there may be some cautiousness with Care Ratings’ report that corporate bond issuance declined 13% to Rs 4 lakh crore during the first nine months of the current financial year due to higher cost of borrowing and slowing investment activity. It said higher cost of borrowings amid liquidity challenges in the Non-banking finance companies (NBFC) segment (that dominates the corporate bond with a nearly 70% share) as well as limited pick up in investments have contributed to lower issuances. Meanwhile, the government introduced a Bill to set up a unified authority for regulating all financial services in international financial services centres (IFSCs) in the country. There will be some buzz in the banking sector stocks with the government’s statement that loans worth Rs 7,277.31 crore of public sector banks under Pradhan Mantri Mudra Yojana (PMMY) have turned bad at the end of March 2018. Also, there will be some reaction in port sector stocks with report that major ports of the country together handled 578.86 Million Tonnes (MT) of cargo during April-January 2019, representing a growth of 3.11%. There will be some important result announcements to keep the markets in action.

The US markets rose on Tuesday, with gains over a percent, as President Donald Trump downplayed the chance of another government shutdown and said he could delay new tariffs on Chinese imports. Asian markets are trading mostly in green, tracking overnight gains on Wall Street amid optimism over US-China trade talks.

Back home, Indian equity markets extended southward journey on Tuesday, as both the larger peers, Sensex and Nifty, ended the day with sharp losses. The bourses made a cautious start of the day to trade mostly in red terrain, affected by 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. But, losses remained limited in the first half of the trading session, with Minister of State for Micro, Small and Medium Enterprises (MSMEs) Giriraj Singh’s statement that the value of MSME related products’ export reached $147,390.08 million during 2017-18, as per the information received from Directorate General of Commercial Intelligence and Statistics (DGCIS). In the second half of the trading session, the key indices extended their losses to close near their intraday low points, despite positive cues from global markets. Domestic sentiments were pessimistic, amid a private report stating that India’s budgets show the government’s been fixing unrealistic revenue targets, and in the process setting itself up for falling short of fiscal deficit goals. The market participants got cautious with the Comptroller and Auditor General (CAG) report that the Ministry of Finance spent Rs 1,157 crore on various heads during 2017-18 without obtaining prior approval of Parliament. The report further noted that the Ministry of Finance did not devise a suitable mechanism in respect of new service/new instrument of service, which led to the extra spending. Investors overlooked India Ratings and Research’s (Ind-Ra) report which has maintained a stable outlook on the infrastructure sector, except thermal power, for financial year 2020. Finally, the BSE Sensex fell 241.41 points or 0.66% to 36,153.62, while the CNX Nifty was down by 57.40 points or 0.53% to 10,831.40.