Sensex, Nifty likely to make negative start

Snapping eight-day losing streak, Indian markets made a strong come back on Wednesday, with Sensex and Nifty recapturing their crucial 35,700 and 10,700 levels, respectively, on account of a short covering. Today, the markets are likely to make negative start amid weak cues from Asian peers. Traders will be concerned with the commerce and industry ministry’s data showing that foreign direct investment (FDI) into India contracted by 7% to $33.49 billion during April-December in the current fiscal. Foreign fund inflows during April-December 2017-18 stood at $35.94 billion. A decline in foreign inflows could put pressure on the country's balance of payments and may also impact the value of the rupee. There will be some cautiousness with report that the Goods and Services Tax (GST) Council has deferred a decision on tax rates on real estate and lottery till February 24, and extended the deadline for businesses to file sales returns for January till February 22 for all states; and February 28 for Jammu & Kashmir. However, traders may take some encouragement later in the trade with private report that India will remain the fastest growing major economy, much ahead of China, in the next decade 2019-28. Some support may also come with the Finance Ministry expecting bad loan recoveries to touch Rs 1.80 lakh crore during the current fiscal with two major cases at the final stage of resolution. Besides, the latest EPFO payroll data showed that employment generation in the formal sector almost trebled to touch a 16-month high of 7.16 lakh in December 2018 compared to 2.37 lakh in the year-ago month. Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das would be holding a meeting, later in the day, with the CEOs and MDs of the banks, both public and private sector, to discuss the issue of transmission of rate cuts by the central bank to the actual loans being disbursed by the banking sector. There will be buzz in the banking sector stocks with report that the government announced final recapitalisation tranche amount of Rs 48,239 crore for as many as 12 public sector banks, in a bid to take them out of RBI’s prompt corrective action framework. There will be some reaction in sugar sector stocks with ISMA’s report that sugar production as on February 15 in the current sugar season has increased nearly 8% to 21.93 million tonne (MT), against 20.35 MT in the same period last year. It said the recent 7% increase in the minimum selling price (MSP) of sugar, from Rs 29 per kilo to Rs 31 per kilo, will generate additional revenue for mills and help these in the payment of cane arrears.

The US markets ended higher on Wednesday after Federal Reserve minutes further signaled the US central bank’s dovish posture on monetary policy. Asian markets were trading mostly lower on Thursday despite US Federal Reserve minutes affirmed it would be patient on interest rate rises.

Back home, Indian equity bourses bounced back on Wednesday to end the trading session with strong gains of over a per cent. The start of day was a fabulous, aided by Care Ratings’ report that signalling an end to the liquidity crisis that NBFCs have been facing since last September, corporate bond issuances by them have risen by 30% in January, reflecting renewed confidence among both issuers as well as investors. Trading sentiments also got boost, after Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu cleared a proposal aiming at simplifying the process of exemptions for Start-ups under Section 56 (2) (viib) of Income Tax Act, which will encourage investments in Start-Ups. Adding comfort among traders, the government said the revised GDP figures for demonetisation year was not cooked up and, in fact, the growth rates are likely to go up further due to the GST. On January 31, the government revised the GDP growth rates by 110 basis points (bps) from 7.1% to 8.2% for 2016-17, the year of demonetisation, and by 50 bps from 6.7% to 7.2% for fiscal 2017-18. In the last leg of the trade, the key indices extended gains to settle near their intraday high points, tracking positive global markets. Street got encouragement as the Cabinet approved a new electronics policy which aims to create a $400 billion electronic manufacturing ecosystem by 2025 and generate 1 crore jobs in the country. The National Electronics Policy 2019 proposes to boost mobile manufacturing in the country to 1 billion units worth $190 billion of which 600 million units worth $110 billion will be exported from the country. Street overlooked a private report stating that despite the almost loose fiscal and monetary policies, the economy is likely to slow down to 6-6.5 percent in the first half of 2019, due to weak global demand, political uncertainty and tighter financial conditions. Finally, the BSE Sensex gained 403.65 points or 1.14% to 35,756.26, while the CNX Nifty was up by 131.10 points or 1.24% to 10,735.45.