Benchmarks to make weak start amid mixed Asian cues

Indian markets gave up all of their intraday gains and ended in red on Wednesday on the back of last hour selling pressure. Investors booked profits in banking, auto, metal and pharma stocks. Today, the markets are likely to make a weak start amid higher oil prices coupled with mixed leads from Asian peers. Traders will be concerned with report that volatile crude oil prices, a strong dollar and rising US bond yields has resulted in foreign institutional investors (FIIs) turning big sellers in the Indian market. Out of the 425 companies on the BSE-500 index, for the quarter ending December (Q3), there has been a decline in FII holdings in 256 companies, while only 169 companies saw net buying by FIIs. There will be some cautiousness with the Reserve Bank of India’s (RBI) data showing that both bank credit as well as deposits growth marginally declined on a fortnightly basis, clipping at 14.5 percent at Rs 94.29 lakh crore deposits grew at a tepid 9.63 percent to Rs 121.22 lakh crore for the fortnight ending February 1. however, some support may come later in the day with report that the cabinet is expected to soon consider a proposal of FDI-linked relaxation for mandatory 30 per cent local sourcing norms for foreign single brand retailers by allowing them more time to comply with regulations. Meanwhile, IT lobby group NASSCOM and Data Security Council of India (not-for-profit body on data protection set-up by NASSCOM) have urged the government not to generalise the intermediaries under the proposed changes to the Information Technology Rules. Besides, the government hiked the minimum support price for raw jute to Rs 3,950 per quintal for 2019-20 season from Rs 3,700 per quintal in the previous season. There will be some buzz in the public sector banks (PSBs) with report that the Reserve Bank of India (RBI) on February 13 imposed penalties of Rs 5 crore on four PSBs including State Bank of India (SBI) and Corporation Bank for violation of various banking norms. A penalty of Rs 2 crore has been imposed on Corporation Bank and Rs 1 crore each SBI, Bank of Baroda and Union Bank of India. also, there will be some reaction in MSMEs stocks with report that the government approved a three-year extension of the Credit Linked Capital Subsidy and Technology Up-gradation Scheme for MSMEs with total outlay of 2,900 crore. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended higher on Wednesday as investors greeted positive signs on US-China trade talks and higher oil prices lifted petroleum-linked equities. Asian markets are trading mixed as investors hoped for progress in the latest China-US tariff talks while bracing for Chinese trade data expected to show further falls in exports and imports.

Back home, selling in last leg of trade mainly played spoil sports for the Indian equity benchmarks, where key gauges erased all of their gains and settled in red on Wednesday, with cut of one third of a percent. Benchmarks started the session with jubilation on the back of positive macro-economic data. India’s industrial growth measured by IIP inched up to 2.4% in the month of December 2018, after hitting a 17-month low in November, while retail inflation based on CPI continued its southward journey for another month and eased further to 2.05% in the month of January 2019, the lowest in the last 19 months. The markets traded in green for the most part of the session, as Finance Minister Piyush Goyal said that now individuals earning up to Rs 9.5 lakh can escape liability by taking advantage of saving schemes, stressing that tax concessions have been provided with a view to help poor and middle class people living on a tight budget. Investors also got comfort with reports that the Cabinet is expected to soon consider a proposal of FDI-linked relaxation for mandatory 30 per cent local sourcing norms for foreign single brand retailers by allowing them more time to comply with regulations. The commerce and industry ministry has already circulated a draft cabinet note seeking views of different ministries including the department of economic affairs on the proposal. However, in the last hours of the trade, the key indices erased all of their losses to end in red terrain, as traders got cautious after the Comptroller and Auditor General (CAG) pointed out irregularities in the way part of goods and services tax (GST) revenue was transferred to states in 2017-18. It said the devolution of Integrated GST (IGST), which is collected on the inter-state supply of goods and services and imports, to states did not happen according to provisions of the law. Some concerns also came with a report that suspicious income tax refund claims have gone up in last three years and scrutiny assessments have been initiated against taxpayers claiming high refunds inconsistent with the pattern of income and investments. The number of suspicious refund claims selected for scrutiny stood at 20,874 in 2018-19, 11,059 in 2017-18 and 9,856 in 2016-17. The market participants took note of the Minister of State for Micro, Small and Medium Enterprises (MSMEs) Giriraj Singh’s statement that there is need for financial inclusion of small entrepreneurs, underlying that without whom the country cannot develop. Finally, the BSE Sensex fell 119.51 points or 0.33% to 36,034.11, while the CNX Nifty was down by 37.75 points or 0.35% to 10,793.65.