Benchmarks likely to make negative start on Friday

Indian markets shrugged off early weakness and ended higher for second straight session on Thursday, with auto, banking, pharma and metal stocks rallying amid buying by foreign and domestic institutional investors. Today, the markets are likely to make a negative start on weak global cues amid cautiousness over US-China trade talks coupled with disappointed economy data in US. Traders will be concerned with rating agency Moody’s statement that the fresh round recapitalisation of 12 state-run banks is positive as it will help them improve their core capital but a complete turnaround is still away due to the large quantum of legacy bad loans. It said these banks are far from a complete turnaround as large volumes of problem-loans will still continue to cap improvements in profitability and capitalisation, constraining their credit profiles. However, some support may come later in the day with Niti Aayog’s note stating that the host of reforms undertaken by the government has transformed India into the fastest-growing major economy along with the macroeconomic stability not witnessed in the past. It added the country's growth has decisively increased over the last five years and is much higher than the average growth among the emerging and developing economies. Some support may also come with Prime Minister Narendra Modi’s statement that India is on the way to becoming a $5 trillion economy soon and hoped that the country would to be among world's top three economies in the next 15 years. Traders may take note of the Reserve Bank of India's monetary policy committee (MPC) said in minutes that India needs to take steps to boost economic growth as the inflation outlook remains low. Meanwhile, Retirement fund body Employees' Provident Fund Organisation (EPFO) has announced an increase in interest rate to 8.65 percent from 8.55 percent on PF deposits for 2018-19, to its 6 crore subscribers. There will be some buzz in the reality sector stocks with report that the proposed bid by the Centre to reduce GST on the under-construction houses to a maximum of 5 per cent without input tax credit (ITC) has been welcomed by developers who think it will revive demand.

The US markets ended in red on Thursday pressured by disappointing readings on the state of the US and European economies. Asian markets are trading lower on Friday following weakness on Wall Street as investors nervously watched the US-China trade talks in Washington.

Back home, Indian benchmarks gained for the second consecutive session on Thursday, with Sensex and Nifty closing above their crucial psychological levels of 35,800 and 10,750, respectively. The markets made a cautious start, affected with the National Association of Software and Services Companies’ (NASSCOM) latest survey report stating that global economic uncertainties are leading to a cautionary outlook among CEOs, but they expect digitization initiatives to continue with the same momentum. According to the report, digitization of businesses and enhanced customer experience have emerged as the top 2 spending areas in IT and BPM for 2019. Some concerns also came with reports 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, in late morning deals, key indices gained momentum to end the trading session in green territory, aided by Prime Minister Narendra Modi’s statement that the Indian economy is based on sound fundamentals and will in the near future double in size to $5 trillion. Traders also took encouragement with a private report stating that India will remain the fastest growing major economy, much ahead of China, in the next decade 2019-28. Some support 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. Adding comfort among the market participants, the Retirement fund body, Employment Provident Fund Organisation (EPFO) in its latest Net Payroll Data report showed that employment generation in the India’s formal sector almost trebled to touch a 16-month high of 7.16 lakh in December 2018 as compared to 2.37 lakh in the same month a year ago. Finally, the BSE Sensex gained 142.09 points or 0.40% to 35,898.35, while the CNX Nifty was up by 54.40 points or 0.51% to 10,789.85.