Markets likely to make positive start ahead of RBI policy outcome

Indian markets snapped four-day winning streak and ended lower after private weather agency Skymet forecast a below-normal monsoon this year, citing a developing El Nino phenomenon, marked by a warming of the sea surface on the Pacific Ocean. Today, the start of the session is likely to be in green ahead of the Reserve Bank of India’s (RBI) monetary policy decision, which is due later in the day. Market participants are expecting a rate cut from the monetary policy committee in its first bi-monthly policy of 2019-20. Global cues are also likely to support the sentiment as Asian markets reached their 8-month high in early trade. On the domestic front, investors will also be eyeing Services PMI data for the month of March to be out later in the day. Traders will be getting encouragement with Commerce and Industry Minister Suresh Prabhu’s statement that India's exports are expected to reach $32.38 billion in March, the highest in any month so far, on account of healthy growth in sectors such as pharmaceuticals. He said that exports would cross $331 billion mark in the 2018-19 fiscal year. There will be some support with Vice President M Venkaiah Naidu’s statement India would continue to grow at a higher economic growth rate until 2021, while citing the World Bank estimates. World Bank estimates suggest that India would continue to grow at a high rate until 2021. However, there may be some cautiousness with a private report that India saw the lowest number of new investment proposals since 2004-05 during the last fiscal ended March. The report said that this lowest figure of new investments recorded in 14 years added up to a dismal Rs 9.5 trillion (9.5 lakh crore). The report added that 2018-19 would be the fourth consecutive year of decline in new investment proposals which began in 2015-16. Meanwhile, telecom regulator Trai has directed operators to submit before it all tariff plans that they offer to select segments of customers at the end of every month. The new order for segmented tariff disclosures comes after the Supreme Court on January 21 held that there will be no stay on the impugned judgment (of TDSAT) except to the extent of remand. There will be some buzz in the IT sector stocks as Nasscom report stating that with increased adoption of futuristic technologies such as Artificial Intelligence (AI) and Machine Learning (ML), the cloud market in India is poised to grow three-fold to $7.1 billion by 2022.

The US markets ended higher on Wednesday, but off their intraday highs, as investors reacted to upbeat comments on US-China trade talks but weighed a shaky private-sector employment report. Asian markets are trading in green on Thursday, as investors awaited developments on trade talks between the United States and China.

Back home, Indian equity markets witnessed sharp fall to end Wednesday’s session near their intraday low points, with Sensex and Nifty settling below their crucial psychological levels of 38,900 and 11,650, respectively. After a fabulous start, the markets remained bullish for the most part of the session, aided by Asian Development Bank’s (ADB) flagship report that India's Gross domestic product (GDP) growth is set to pick up at 7.2 percent in 2019, on the back of strengthening consumption. It also said that the country’s economy is also expected to clock a growth rate of 7.3 percent in 2020 as policy rates are cut and farmers receive income support, bolstering domestic demand. Market participants were seen taking encouragement with a report that India’s exports are likely to register an all-time high of $330 billion in FY19, amid slowing global merchandise trade growth. Besides, March exports are expected to be above $30 billion, buoyed by strong performances by engineering and pharmaceuticals sectors. But, in the last leg of the trade, key indices lost the momentum to close the session in red terrain, on the back of below normal monsoon forecast. Private weather forecaster Skymet said India’s monsoon rains were seen below normal this year. According to Skymet Weather, monsoon in 2019 was likely to be ‘below normal’ to the tune of 93 per cent of the long period average (LPA) of 887 mm for the fourth-month period from June to September. Adding more worries on the street, International Monetary Fund (IMF) Managing Director Christine Lagarde said that global growth has lost momentum amid rising trade tensions and tighter financial conditions, but pauses in rate hikes will help boost activity in the second half of 2019. Traders also got cautious with a private report that the Central Board of Direct Taxes (CBDT) collected Rs 1,117,416.5 crore (11.17 lakh crore) in total direct taxes in FY 2018-19, a shortfall of around Rs 83,000 crore or 7.4 percent of the Rs 12 lakh crore collection target. Finally, the BSE Sensex declined 179.53 points or 0.46% to 38,877.12, while the CNX Nifty was down by 69.25 points or 0.59% to 11,643.95.