Sensex, Nifty to make cautious start amid mixed cues from Asian peers

Indian equity markets ended Wednesday’s lackluster trade almost flat, as weak global cues prompted traders to book some profits following a seven-session winning streak. Today, the markets are likely to make a cautious start amid mixed cues from Asian peers. Investors will be cautious following the US Federal Reserve’s dim outlook for the global economy. On the domestic front, there will be some concern with a private report that the liquidity crisis in the non-banking finance companies (NBFC) space triggered by the default of infrastructure ending major IL&FS last September is continuing to have an impact on mutual fund (MF) deployments in the sector. The overall exposure of debt MFs to NBFCs stood at Rs 2.2 lakh crore in February, a drop of Rs 45,386 crore since July 2018 when the liquidity stress first emerged. Some cautiousness may also come in with Icra’s report that as many as 52 road projects worth Rs 37,019 crore were sold between 2015 and 2018, due to liquidity crisis faced by their promoters or the special purpose vehicles executing them. However, traders may take some encouragement with report that Finance Minister Arun Jaitley has made a case for setting up GST Council-like federal institutions to promote healthcare, rural development and agriculture sectors by optimally utilising resources of the centre and states. He said agriculture, rural development and healthcare is one area where the central government spends a lot of money on supporting farmers, creating infrastructure and building health centres for poor population. Meanwhile, Information Technology Minister Ravi Shankar Prasad has said the IT sector has created 8.73 lakh new jobs in the past five years. There will be some reaction in sugar sector stocks with report that the food ministry has asked states to ensure that sugar mills are not selling the sweetener at below the minimum selling price (MSP), which has been increased recently to Rs 31 a kilogram from Rs 29. It said all mills have to sell sugar at Rs 31 a kg plus GST and transportation charges and action may be taken against mills selling sugar below floor price.

 The US markets ended sharply higher on Thursday as a batch of largely upbeat US data offset economic concerns raised by the Federal Reserve no longer forecasting interest rate hikes this year. Asian markets are trading mixed on Friday as investors grappled with the consequences of a recent change in interest rate outlook at the US Federal Reserve.

Back home, Indian equity benchmarks ended flat on Wednesday after seven days rally. The markets made a cautious start but managed to keep their heads above water for the most part of the session, amid reports that the government has given a major relief to startups by enhancing definition of startups. It has decided to relax angel tax norms for startups, including increasing the investment limit to Rs 25 crore for availing income tax concessions by startups. Traders were positive, as the Vice President of India, M. Venkaiah Naidu expressed the hope that ‘in all our countries, we would be able to translate economic growth into inclusive, sustainable development’ and referred to Indian government’s resolve to transform governance and ultimately the lives of the people. Adding relief on the street, India's Ambassador to the US Harsh Vardhan Shringla said that India's growth in last five years has been transformational and the country is all set to emerge as a $5 trillion economy in the next five years. But, key equity indices remain volatile during session and finally ended flat, impacted by a report that there is a 70% chance of El Nino climate cycle forming towards the second half of this year, a forecast that does not augur well for the monsoon season in India. Weak cues from global markets also weighed on the domestic sentiments. Investors got cautious as Reserve Bank of India (RBI) governor Shaktikanta Das expressed need to stick to the fiscal roadmap by adopting a commonly agreed expenditure code-based spending plan to address the socioeconomic challenges. He also advocated giving permanent status to the finance commission. Further, the market participants took a note of the report showing that Indian mutual funds and insurance firms, which scooped up shares while foreign institutional investors (FIIs) stayed away, turned net sellers of Rs 10,247.9 crore in March, even as FIIs returned to Indian markets. Finally, the BSE Sensex rose 23.28 points or 0.06% to 38,386.75, while the CNX Nifty was down by 11.35 points or 0.10% to 11,521.05.