Markets likely to make negative start mirroring weakness in Asian peers

Indian markets extended their gains for fourth straight session and ended higher with modest gains on Thursday as investors sentiment remained positive amid a strengthening rupee and sustained foreign fund inflows. Today, the start of last trading day of the week is likely to be in red mirroring weakness in Asian peers amid global growth concerns. The European Central Bank slashed its growth forecasts and launched an emergency round of policy stimulus. On the domestic front, traders will be concerned about a report that the government may be staring at higher-than-projected deficit for the current fiscal with country's direct tax revenue expected to fall short by Rs 60,000 to 70,000 crore over the revised target of Rs 12 lakh crore for FY19. As per the report, the direct tax revenue growth is at 12.2 per cent so far as against revised full year aim of 19.8 per cent. However, some support may come later in the day with Commerce and Industry Minister Suresh Prabhu’s statement that the country’s goods export will touch $330 billion in 2018-19, which will be the highest ever. He said the country's merchandise exports have seen high growth in the past six years through sector-specific interventions, focused export promotion initiatives, and quick resolution of issues. Meanwhile, the Reserve Bank of India (RBI) notified the norms for banks with regards to two per cent interest subvention or subsidy for short-term crop loans during 2018-19 and 2019-20. The Centre has already approved the scheme. Under the scheme, an additional two per cent interest subvention is provided to farmers repaying loans promptly. There will be some reaction in power sector stocks with report that the government has cleared investment proposals worth over Rs 31,560 crore in power projects, including two coal-based thermal plants and a hydro project on river Chenab in Jammu and Kashmir. There will be some buzz in the textile industry stocks with report that the Union Cabinet has approved a scheme for rebate of all state and central embedded levies for apparel and made-up textile segments, which would make shipments zero-rated, thereby boosting the country's competitiveness in export markets. Besides, the Cotton Association of India said that the total cotton production is likely to decline by over 11 percent to 328 lakh bales (of 170 kgs each) for the 2018-19 season, mainly low rainfall in many key cotton growing areas. In the last season (2017-18) the total cotton output stood at 365 lakh bales.

The US markets ended lower on Thursday after the European Central Bank unveiled plans to deploy additional stimulus, raising fresh worries about the health of the global economy. Asian markets are trading in red on Friday on the back of an overnight slide on Wall Street, as investors grappled with fresh concerns over the state of the global economy.

Back home, Indian bourses managed to end Thursday’s trading session in positive territory, with Sensex and Nifty reclaiming their crucial psychological level of 36,700 and 11,050, respectively. Markets made a positive start, amid reports that the income tax (I-T) department notified the modified norms for startups to enable them to seek 'angel tax' exemption for investments of up to Rs 25 crore, with an aim to encourage budding entrepreneurs. The modified norms will be effective retrospectively from February 19, 2019, when the Department for Promotion of Industry and Internal Trade (DPIIT) relaxed the norms for startups. Trade remained positive for the most part of the session, aided by CARE Ratings’ latest report showing that debt quality of Indian companies improved during January-August 2018. CARE Ratings’ Debt Quality Index (CDQI) remained positive in the reported period. However, some volatility witnessed during noon deals, as the Process Plant and Machinery Association of India (PPMAI) expressed concern on surge in metal and capital goods imports from countries such as Korea, Indonesia, Malaysia and Japan with whom India has pacts to promote free trade. It said that the Free Trade Agreements (FTAs) along with lack of reciprocity is adversely hurting the steel manufacturers as well as the capital goods industry. Traders got cautious with a private report stating that the likelihood of Indian GDP growth coming at below 7 percent in 2019-20 is very high despite aiding factors like low oil prices and an expansionary budget. The report also noted that global slowdown, tight financial conditions and political uncertainty in the election year will be the biggest headwinds for growth. Finally, the BSE Sensex surged 89.32 points or 0.24% to 36,725.42, while the CNX Nifty was up by 5.20 points or 0.05% to 11,058.20.