Sensex, Nifty to open marginally in green on Wednesday

Indian markets ended lower on Tuesday amid rising geo-political concerns. Weak cues from global equities and selling pressure on financials and realty stocks too weighed on markets. Today, the start of the session is likely to be marginally in green mirroring positive cues from Asian peers after the US Federal Reserve chairman Jerome Powell reinforced the US central bank's recent shift towards a more patient approach on policy in the face of a slowing economy. However, there may be some cautiousness amid geopolitical tensions between India and Pakistan. Traders may also be concerned with the government data showing that fiscal deficit touched 121.5 percent of the full-year revised target of Rs 6.34 lakh crore at the end of January on account of lower revenue collections. The fiscal deficit, or the gap between the government's expenditure and revenue, stood at Rs 7.70 lakh crore during April-January of the current financial year ending March. At the end of January 2018, the deficit was 113.7 percent of the Revised Estimate (RE). Meanwhile, seeking to curb excessive salary payout practices, the Reserve Bank of India (RBI) has proposed strict compensation norms for senior officials of private as well as foreign banks, including minimum 50 percent variable component and money clawback provisions. Besides, the government extended the deadline to impose retaliatory customs duties on 29 US products, including almond, walnut and pulses, till April 1. There will be some buzz in the select banking sector stocks with the RBI stating that Allahabad Bank, Corporation Bank and Dhanlaxmi Bank have been taken out of the Prompt Corrective Action (PCA) framework. Bank of India (BoI), Bank of Maharashtra (BoM) and Oriental Bank of Commerce (OBC) were taken out of PCA framework on January 31 after infusion of capital in these banks.

The US markets ended in red on Tuesday as investors digested the release of weaker-than-expected Home Depot earnings, mixed economic data and testimony from the top-ranked Federal Reserve official. Asian markets were higher trading higher on Wednesday as investors watch the second summit between President Donald Trump and North Korean leader Kim Jong Un in Vietnam.

Back home, Indian equities suffered weakness on Tuesday, with both the larger peers, Sensex and Nifty closing the day below their psychological levels of 36,000 and 10,850, respectively. The indices made a weak start of the session impacted by domestic ratings agency Icra’s report that India Inc witnessed a dip in both revenue growth as well as margins in the December quarter compared to the preceding three months. The analysis is based on the aggregate numbers reported by 648 listed companies, which shows a revenue growth of 17.3% in Q3 down from 19.4% in the preceding three months. Domestic sentiments also got hit with Bibek Debroy, the head of Prime Minister’s economic advisory panel, stating that India lacks good data on economy and jobs as it is majorly an informal economy. Some concerns also came with reports that the flow of foreign direct investment (FDI) into India is dropping and may suffer its first full-year decline since Prime Minister Narendra Modi came to power in 2014. Inbound FDI dropped 7% to $33.5 billion in the nine months between April and December 2018, compared with $36 billion in the year-earlier period. The markets remained sluggish throughout the day but managed to settle off day’s low points, taking support from the State Bank of India (SBI) Research report that Indian economy is likely to grow in the range of 6.6-6.7 percent during the third quarter of the current fiscal year 2018-19 (FY19). It added that for the full financial year, the growth will be 7.2 percent. The market participants got some relief with reports that the Ministry of Housing & Urban Affairs gave approval for the construction of another 5,60,695 more affordable houses for the benefit of urban poor under Pradhan Mantri Awas Yojana (Urban). Adding some support, the Commerce and Industry Minister Suresh Prabhu said that India’s goods and services exports, which are recording healthy growth so far, would surpass $500 billion in fiscal 2018-19, despite challenges being faced on the global trade front. Prabhu also said that the ministry is working on identifying new products and new markets to further push the shipments. Finally, the BSE Sensex lost 239.67 points or 0.66% to 35,973.71, while the CNX Nifty was down by 44.80 points or 0.41% to 10835.30.