Benchmarks likely to make positive start on Tuesday

Indian markets extended their northward journey for third straight session on Monday, with Sensex closing above 39,000 mark for the first time, amid firm cues from Asian peers. Today, the markets are likely to open in green mirroring positive global cues amid easing growth concerns. Investors will be eyeing data of Purchasing Managers' Index (PMI) for manufacturing for March to be out later in the day. Traders will be getting encouragement with report that the Reserve Bank of India (RBI) will again swap up to $5 billion to infuse durable liquidity in the system, a month after the first swaps saw a massive response from banks. Market participants offered up to $16.31 billion against the notified amount of $5 billion in the auction held on March 26. The next auction for three-year tenure will be held on April 23. Some support may also come with a private report that the government has been able to contain its fiscal deficit around 3.4% of the GDP in 2018-2019 by resorting to withdrawals/cash support from public accounts and savings on expenditure. However, there may be some cautiousness with the Commerce Ministry’s data showing that the growth of eight core sectors slowed down to 2.1% in February 2019 as compared to 5.4% in February 2018, due to fall in output of crude oil and refinery products. Production of crude oil and refinery products contracted by 6.1%, and 0.8%, respectively, in February. Meanwhile, markets regulator, the Securities and Exchange Board of India (SEBI) has proposed amendments to norms governing Self Regulatory Organisations, including recognising such entities on a nomination basis. There will be some buzz in the banking sector stocks with report that the Reserve Bank of India (RBI) has changed the disclosure norms for banks on material divergences on provisioning, stating that banks will now have to disclose their provisions if the divergence found is more than 10 per cent of the bank’s profit before provisioning and contingencies. Besides, rating agency Crisil said that system wide bad loans will improve by 180 basis points to 8.5% in March 2020 from FY19 levels on slower slippages, and the state-run banks will turn profitable for the first time in four years. It added that the banking system will close FY19 with gross non- performing assets of 10.3%. There will be some reaction in auto sector stocks with report that auto majors Maruti Suzuki India, Hyundai and Mahindra & Mahindra reported single digit sales growth in the financial year ended March 31, as slowdown hit passenger vehicles demand for almost nine months of the year.

The US markets rose on Monday as strong manufacturing data out of the US and China eased worries of a possible global economic slowdown. Asian markets are trading higher on Tuesday following overnight gains on Wall Street, as concerns over a possible global economic slowdown eased.

Back home, key equity benchmarks started the first day of financial year 2019-2020 with jubilation, though they ended off their intraday high points. After a firm start, the markets remained positive throughout the session, aided by the Reserve Bank of India’s (RBI) data showing that India's foreign exchange reserves continued to surge for the third week in a row, adding $1.029 billion at $406.667 billion in the week to March 22. Traders were optimistic with Chief Economic Advisor Krishnamurthy Subramanian’s statement that inflation has remained well under control during the Modi government’s tenure, providing relief to the middle class and the poor. Low prices, strong monetary policy framework by the RBI and economic reforms have boosted the domestic consumption in the country. Sentiments also got boost after the goods and services tax (GST) collections scaled record high of Rs 1.06 lakh crore in March, up from Rs 97,247 crore in the previous month, as compliance improved amid increased number of returns filed. Total number of summary sales return GSTR-3B filed for the month of February up to March 31, stood at 75.95 lakh. However, in the last leg of the trade, key indices trimmed their gains, as the RBI said that the country's current account deficit (CAD) widened to 2.5% of Gross Domestic Product (GDP) in Q3FY19 from 2.1% a year ago, primarily due to a higher trade deficit. In absolute terms, India’s CAD widened to $16.9 billion in the October-December 2018 quarter against $13.7 billion in the year ago quarter. Adding more worries, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report showed that declining household savings may lead to wider current account deficit (CAD) and rise in the interest rates. Gains also got trimmed, with India’s fiscal deficit touching 134.2% 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. Finally, the BSE Sensex rose 198.96 points or 0.51% to 38,871.87, while the CNX Nifty was up by 45.25 points or 0.39% to 11,669.15.