Markets to make negative start of the new week

Indian markets before going for a long weekend posted strong gains on Friday as firm cues from Asia and Europe as well as signs of de-escalation of tensions at the border helped investors shrug off weak Gross Domestic Product (GDP) data. The markets remain closed on March 04 for Mahashivratri. Today, the start of the new week is likely to be in red after US President Donald Trump said he intends to end India’s preferential trade treatment under the Generalized System of Preferences program (GSP) that allows $5.6 billion worth of Indian exports to enter the United States duty-free. Also, weak global cues may weight on the trading sentiment. On the domestic front, traders will be concerned with the Finance Ministry’s statement that Goods and Services Tax (GST) collections in February dropped to Rs 97,247 crore from Rs 1.02 lakh crore in the previous month. The government has lowered the GST collection target for current fiscal to Rs 11.47 lakh crore in the revised estimates, from Rs 13.71 lakh crore budgeted initially. Traders will be eyeing the Nikkei India Services PMI for February 2019 will be released later in the day. Services PMI dipped to a three-month low of 52.2 in January 2019 from 53.2 in December 2018. However, some support may come later in the day with Economic Affairs Secretary Subhash Chandra Garg stating that spurt in PMI indicates strong inflow of new orders and strengthening of manufacturing sector growth. Meanwhile, investors may take note of India's chief economic adviser Krishnamurthy Subramanian’s statement that India's next government will have to bring in land, labour and financial sector reforms to improve the productivity of the manufacturing sector and boost economic growth. There will be some buzz in the banking sector stocks with Crisil’s report that the RBI's move to align risk weights of banks' exposure to non-banking finance companies (NBFCs) with their respective credit ratings will help banks to create a lending headroom of Rs 1.4 lakh crore. Besides, the RBI has imposed a total monetary fine of Rs 11 crore on four banks - Karnataka Bank, United Bank of India, IOB and Karur Vysya Bank - for non-compliance of directions on Swift messaging software. There will be some reaction in sugar sector stocks with report that the government's decision to provide up to Rs 10,540 crore as soft loans to sugar mills will help them in clearing arrears of cane growers by about Rs 9,000 crore. Sugar cane arrears to farmers have crossed Rs 20,000 crore in the current marketing year 2018-19 (October-September).

The US markets ended in red on Monday, following weak US construction data and investors awaited more details on an expected US-China trade deal. Asian markets are trading lower in early trade on Tuesday after China cut its economic growth target and pledged measures to support the economy amid growing challenges from rising debt and a dispute over trade and technology with the US.

Back home, Friday turned out to be a great day for Indian equity benchmarks, with Sensex and Nifty ending the session above their 36,000 and 10,850 levels, respectively. The start of the day was jubilant, buoyed by World Bank’s report that increasing exports can lead to better jobs and higher wages in India, including more formal sector employment for youth and women. Adding enthusiasm among traders, the Indian manufacturing sector strengthened further in the month of February, with a sharp and accelerated increase in sales boosting growth of output and employment. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 54.3 in February from 53.9 in January. Some comfort also came after Finance Minister Arun Jaitley expressed hopes that the remaining six public sector banks (PSBs) under the Reserve Bank of India’s (RBI) prompt corrective action (PCA) framework will soon come out of it with the government commitment of support to them. The markets maintained their gains to end the day on strong note, amid Moody's report stating that the Indian economy is expected to grow at 7.3% in calendar year 2019 and 2020, and the government spending announced ahead of elections this year will support near-term growth. The market participants paid no heed towards slowdown of economic growth. India’s gross domestic product (GDP) growth slowed to a five-quarter low of 6.6% in October-December period of this fiscal (FY19), as compared to 7% growth in the same quarter of FY18, on the back of lower farm and manufacturing growth and weaker consumer demand. Investors also overlooked reports that the growth of eight core infrastructure industries slowed down to 1.8% in January due to fall in output of crude oil, refinery products and electricity. According to data released by the ministry of Commerce and Industry, the combined Index of eight core industries stood at 134.8 in January, 2019. Finally, the BSE Sensex surged 196.37 points or 0.55% to 36,063.81, while the CNX Nifty was up by 71.00 points or 0.66% to 10,863.50.