Benchmarks to make negative start of new month amid weak GDP data

Indian markets extended their southward journey for third straight session and ended marginally lower on Thursday after investors squared-off positions as February derivative contracts expired amid concerns over tension between India and Pakistan. Today, the markets are likely to make a negative start of the new month amid weak global cues on growth concerns. Investors will be eyeing manufacturing PMI data to be out later in the day. There will be cautiousness with the Central Statistics Office’s (CSO) data stating that India’s economic growth slowed to a 5-quarter low of 6.6% in October-December period of this fiscal on the back of lower farm and manufacturing growth and weaker consumer demand. The Gross Domestic Product (GDP) at constant prices (2011-12) had grown at 7 per cent in October-December quarter of the previous financial year. Traders will also be concerned about the government’s data showing that eight core industries grew at the slowest pace in 19 months in January as the production of crude oil, refinery products and electricity contracted. Also, there will be negative reaction on CARE Ratings’ report that FDI equity inflows fell for the first time in the past 5 years of Modi rule during the first 9 months of FY19 in terms of annual growth rate. During April-December period of the fiscal, the FDI equity inflows aggregated to $33,492 million, nearly 7% lower than the inflows worth $35,914 million during the corresponding period of FY18. Meanwhile, the Cabinet approved National Mineral Policy 2019 which will lead to sustainable mining sector development in future, while addressing the issues of project affected persons, especially those residing in tribal areas. There will be some buzz in the banking stocks as Finance Minister Arun Jaitley assured government funding support to public sector banks and hoped that the 6 lenders which remain under the RBI's prompt corrective action framework will soon come out of it. There may be some reaction in auto stocks with Finance Minister Arun Jaitley’s statement that the Union Cabinet has cleared Rs 10,000-crore programme under the FAME-II scheme, with an eye on promoting electric and hybrid vehicles. Meanwhile, auto companies to announce their monthly sales numbers today.

The US markets ended lower on Thursday following data that showed US economic growth slowed in the fourth quarter even as it topped expectations. Asian markets are trading mostly in red on Friday as investors remained concerned about China’s economy and global trade.

Back home, benchmark indices ended lower on the F&O Expiry day, with Sensex and Nifty slipping below their crucial psychological levels of 35,900 and 10,800, respectively. The markets made a firm start of the day, amid a private report indicating that private equity (PE) investments in India witnessed a 36 per cent growth to $1,325 million despite fall in volume on account of increased follow-on investments last month as compared to a year ago. Trade remained positive for most part of the session, aided by a report that the Ministry of Micro, Small and Medium Enterprises is organizing a programme on Technology Support and Outreach (TECH-SOP) in New Delhi. The objective of the programme is to educate MSMEs and enhance their awareness about latest technological innovation available and sensitize them on the role of technology in creating competitiveness and opportunities. Investors took a note of the commerce ministry’s statement that India and countries of the Latin American and Caribbean region have huge potential to boost economic ties in areas like agriculture, health, energy and information technology. But, volatility which came during noon deals pushed the markets lower to settle in red, on the account of weak cues from global markets. Traders got cautious with Fitch Ratings’ statement that government's $7 billion (around Rs 48,000 crore) fund infusion into public sector banks (PSBs) would not be sufficient to support significantly stronger lending growth. Fitch estimated that banks would need an additional $23 billion (around Rs 1.6 trillion) in 2019, after these latest injections, to sufficiently meet minimum capital standards. Adding more anxiety among market participants, credit rating agency, India Ratings said that the Government has depended on the National Small Savings Fund (NSSF) in FY19, but such borrowing runs the risk of understating the fiscal deficit number. It further noted that the Government has borrowed an additional Rs 500 billion from the NSSF to take its total dependence on this route to Rs 1,420 billion or 22.4 percent of the budgeted fiscal deficit in FY19. Finally, the BSE Sensex lost 37.99 points or 0.11% to 35,867.44, while the CNX Nifty was down by 14.15 points or 0.13% to 10,792.50.