Markets to make optimistic start of the new fiscal year

Indian markets extended their northward journey for second straight day on Friday and ended the fiscal 2018-19 with modest gains amid heavy buying in auto and metal stocks coupled with strong foreign fund flows. Today, start of the new fiscal year (2019-20) is likely to be on optimistic note mirroring firm cues from Asian peers amid trade talks progress. On the domestic front, traders will be keenly eyeing the Reserve Bank of India’s (RBI) first bi-monthly monetary policy statement for 2019-20 later in the week. There are expectations that the RBI may cut key lending rates by another 25 basis points on April 04, to boost economic activities amid fears of global slowdown impacting domestic growth prospects. Investors will also be looking ahead for the core sector data, PMI manufacturing and Services PMI data later in the week. Traders will be getting encouragement with the RBI’s data showing that India's foreign exchange reserves continued to surge for the third week in a row, adding USD 1.029 billion at USD 406.667 billion in the week to March 22. However, there may be some cautiousness with the Controller General of Accounts (CGA) data stating that the country's fiscal deficit touched 134.2 per cent of the full-year revised budgeted estimate at the end of February 2019, mainly due to tepid growth in revenue collections. In absolute term, fiscal deficit for April-February 2018-19 was Rs 8.51 lakh crore as against the revised estimate (RE) of Rs 6.34 lakh crore for the entire year. Traders may also be concerned about the RBI’s data that the country's current account deficit widened to 2.5 per cent of GDP in third quarter of the current fiscal from 2.1 per cent a year ago, primarily on account of a higher trade deficit. In absolute terms, the CAD, or the gap between inflow and outflow of foreign exchange in the current account, was $16.9 billion in the October-December 2018 period, up from $13.7 billion in the year-ago period. Meanwhile, the government has notified a new accounting standard Ind AS 116 that will bring in more transparency in recognition and disclosures about leases in companies' balance sheets. The Indian Accounting Standard (Ind AS) 116 is expected to have a significant impact on various industries, including aviation where airlines mostly operate planes on lease. Ind AS 116 -- to be effective from April 1 -- sets out the principles for recognition, presentation and disclosure of leases. There will be some buzz in the select banking sector stocks with report that Bank of Baroda is catapulting itself for a larger play in the system with the merger of Dena Bank and Vijaya Bank with itself from April 01. The government-forced merger, announced last in September, creates the third largest bank in the country after State Bank of India and HDFC Bank. Besides, the auto sector stocks will also be in action, reacting to their monthly sales numbers.

The US markets settled higher on Friday as optimism over progress on US-China trade talks overshadowed concerns about a slowing economic expansion. Asian markets are trading in green on Monday as positive Chinese factory gauges and signs of progress in Sino-US trade talks supported sentiment.

Back home, key Indian bourses ended the last trading day of the financial year 2018-19 on a firm note, with Sensex and Nifty regaining crucial psychological levels of 38,600 and 11,600, respectively. After a jubilant start, the markets seemed choppy to trade with marginal gains, affected by Crisil Research’s report stating that India Inc’s revenue growth is likely to halve in the fourth quarter due to slump in commodity prices but fall in input costs will shore up profitability of end-user industries. Crisil expects on-year corporate revenue growth for the current quarter to print at 8-9%, down sharply from the average of 16.5% in the previous three quarters. But, trade remained positive throughout the day, buoyed by Commerce Minister Suresh Prabhu’s statement that India's merchandise and services export would touch $540-billion mark this fiscal. He said exports are growing at a healthy pace and shipments of goods would reach over $330 billion. Similarly, services exports would touch about $200 billion. In noon deals, the markets added gains, following firm cues from global markets. Domestic sentiments were positive as Finance Commission Chairman N K Singh made a case for setting up a fiscal council as an institutional mechanism to monitor fiscal consolidation roadmap of the Centre and state governments. He also said fiscal federalism is a dynamic process and 'a Work in Motion'. The street took a note of the Vice President of India, M. Venkaiah Naidu’s statement that farmers were critical for the well-being of the nation and they play a huge role in ensuring and maintaining home grown food security in India. Further, the Vice President said that collective actions were needed to correct development strategies to include preservation of nature. Meanwhile, the commerce ministry has launched a blockchain-based coffee e-marketplace to help farmers integrate with markets so that they can realize fair prices for the commodity. The blockchain will reduce the number of layers between coffee growers and buyers and help farmers double their income. Finally, the BSE Sensex rose 127.19 points or 0.33% to 38,672.91, while the CNX Nifty was up by 53.90 points or 0.47% to 11,623.90.