Benchmarks likely to make cautious start on Tuesday

Indian equity benchmarks ended higher for the sixth straight session on Monday, with modest gains, amid sustained FII inflows coupled with firm global cues. Today, the markets are likely to make a cautious start amid mixed cues from global market. The US Fed will begin its meeting on interest rates later in the day, which ends with a news conference on March 20. On the domestic front, investors will be eyeing the all-powerful Goods and Services Tax (GST) Council’s 34th meeting to be held later in the day, it is expected to take up various issues including the implementation of lower GST rates for the real estate sector. In the previous meeting, the Council slashed tax rates for under-construction flats to 5% and affordable homes to 1%, effective April 1. Traders may take some encouragement with a report that the net direct tax collection figure has crossed the Rs 10 lakh crore mark as on March 16, helped by the fourth and final installment of tax payment. The entire advance tax data from across the country has not come yet. The net direct tax collection during April-January of this fiscal stood at Rs 7.89 lakh crore as against Rs 12 lakh crore targeted for the entire fiscal of 2018-19. Investors may take note of Niti Aayog CEO Amitabh Kant’s statement that India cannot achieve 9-10% Gross Domestic Product (GDP) growth without revolution in the farm sector. He said there is a need to boost investment in the agriculture sector as well as to introduce new technology and market reforms. Meanwhile, the government has constituted an inter-ministerial panel for monitoring, sanctioning and implementation of projects under the Rs 10,000-crore FAME-II programme, aimed at incentivising clean mobility. Besides, the country's first real estate investment trust (REIT) offering has been subscribed 20% on the first day of bidding on March 18. There will be some buzz in information technology (IT) sector stocks with ICRA’s report that the IT services sector is estimated to clock a flat growth of up to 9% in the fiscal year 2019-20. It also said that there will be higher consolidation in the industry, especially among the small and mid-size players, owing to margin pressures in the next decade. There will be some reaction in sugar sector stocks with the Indian Sugar Mills Association’s (ISMA) statement that India’s sugar production rose by 6% to 273.47 lakh tonne till March 15, 2019. On the corresponding date last year, 258.20 lakh tons had been produced.

The US markets settled higher on Monday, ahead of a meeting of Federal Reserve policy makers to begin on March 19, while losses for aircraft maker Boeing dragged capped the further gains. Asian markets are trading mostly lower on Tuesday, ahead of a closely watched meeting by the US Federal Reserve set to kick off later in the day.

Back home, Indian equity barometers ended Monday’s trading session in green territory and extended their winning streak for sixth straight session, with Sensex and Nifty regaining their crucial psychological levels of 38,000 and 11,450, respectively. The markets made a cheerful start of the day, as India’s merchandise exports continued their growth momentum for fifth straight month. Exports grew by 2.44% in the month of February 2019, over the same month of last year, on account of growth in sectors such as pharmaceuticals, textiles, handloom, engineering goods and chemicals. Traders were positive, amid reports that the Reserve Bank of India (RBI) came out with guidelines for financial instruments, with an aim to prevent misuse of price-sensitive information by participants in markets. The guidelines have become effective from March 16, 2019. Some support also came with a report that overseas investors poured in more than Rs 20,400 crore in the domestic capital market in the first half of March, mainly driven by positive global cues. However, in noon deals, key indices pared their gains to trade lackluster, impacted by a private report stating that India will underperform this year compared to other emerging markets as valuations continue to be a concern for the country. But, last-hour buying along with firm global cues lifted the equity indices to settle higher. The market participants took encouragement with Finance Minister Arun Jaitley’s statement that infrastructure development and clearing backlog of defence procurement will be the government’s priorities for the future. He also noted that rural India development and improvement of healthcare and education would be the other priority areas. Traders took a note of report that industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) released a charter of demands to make India a $5 trillion economy by 2025. Finally, the BSE Sensex rose 70.75 points or 0.19% to 38,095.07, while the CNX Nifty was up by 35.35 points or 0.31% to 11,462.20.