Benchmarks likely to make slightly positive start

Indian markets extended their gains for second consecutive session and settled near intraday high levels on Tuesday on intense buying mainly in auto, financial and energy counters amid easing of geo-political tensions and positive macroeconomic outlook. Today, the start is likely to be slightly in green. Traders will be getting some encouragement with the Reserve Bank of India (RBI) stating that it would infuse Rs 12,500 crore into the financial system through op¬en market operations (OMO). The decision is based on an assessment of liquidity conditions and also of durable liquidity needs. Traders may take note of report that Finance Minister Arun Jaitley assured the industry that the government would strive to lower tax rates and broaden the tax base to increase revenue collection. The minister also called upon the industry to pass on benefits of GST rate reduction to consumers. However, the trade may remain range-bound tracking lackluster global cues. There may be some cautiousness with the Centre for Monitoring Indian Economy’s (CMIE) latest report showing that the unemployment rate in India rose to 7.2% in February 2019, the highest since September 2016, and up from 5.9% in February 2018. The unemployment rate has climbed despite a fall in the number of job seekers. There will be buzz in the retail sector stocks with Niti Aayog CEO Amitabh Kant’s statement that E-commerce has revolutionised the retail sector in India and will play a major role in the country's growth story going forward. There will be some reaction in cement industry stocks with Crisil’s report that the recent steep hike in cement prices expected to boost operating profitability of cement manufacturers. It added that the price hikes, coupled with falling costs and rising demand growth, will enable 200-250 basis points on-year improvement in margins in the current quarter. There will be some buzz in the sugar sector stocks with the government’s statement that Sugar mills can sell 24.5 lakh tonne of the sweetener in the open market in the current month. Mills are allowed to sell sugar at a minimum selling price of Rs 31 per kg.

The US markets ended marginally lower on Tuesday as investors weighed ongoing trade negotiations between China and the US. Asian markets are trading mixed on Wednesday as investors awaited fresh directional cues from US-China trade negotiations.

Back home, Indian equity benchmarks ended Tuesday’s trading session on jubilant note, with both Sensex and Nifty posting stellar gains of over a percent. The start of the day was cautious, impacted by 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. However, key indices soon gained traction, as India’s services sector gathered momentum in the month of February, with a quicker expansion in new work supporting a faster increase in output and solid job creation. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose to 52.5 in February from 52.2 in January. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- also surged to 53.8 in February as against 53.6 in January. Rally continued during the second half of the session, tracking firm European markets. The street remained positive, amid reports that the income tax e-returns filed for the April-February period has grown nearly 30% compared with the corresponding period in FY18. While almost 6.4 crore taxpayers filed returns in the first 11 months of the fiscal, the government is expecting 7.6 crore returns to be filed by the end of FY19 against 6.7 crore in FY18. Domestic sentiments were also buoyed by 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. Meanwhile, the Reserve Bank of India’s (RBI) report showed that Indian companies borrowed $2.42 billion from overseas markets in the month of January 2019 through external commercial borrowing (ECB), down by 45 percent from the year-ago period. The borrowings though ECBs were $5.40 billion in January last year. Finally, the BSE Sensex surged 378.73 points or 1.05% to 36,442.54, while the CNX Nifty was up by 123.95 points or 1.14% to 10,987.45.