Sensex, Nifty likely to make pessimistic start amid growth concerns

Indian markets ended higher on Tuesday, with gains of over half a percent each, mainly on the back of late hour buying despite rise in crude oil prices owing to concerns over exports from the war-torn Libya. Today, the markets are likely to make pessimistic start on the back of growth concerns after the International Monetary Fund (IMF) lowered Gross Domestic Product (GDP) outlook for India as well as the global economy. The IMF has moderately scaled down India’s economic growth projection to 7.3 per cent for the current financial year from its earlier forecast of 7.4 per cent and suggested that the country should continue to undertake economic reforms, including hire and fire, to create jobs. Traders will also be concerned about a private report stating that India's retail inflation is expected to have accelerated in March on slightly higher food prices but remain under the Reserve Bank of India's (RBI) medium-term target of 4 percent. As per the report, consumer prices rose at an annual rate of 2.80 percent in March, up from 2.57 percent in February. There will be some cautiousness with the finance ministry’s statement that the government has fallen short of Rs 50,000 crore in its direct tax collection target of Rs 12 lakh crore for 2018-19. The shortfall in direct tax mop-up coupled with lower Goods and Services Tax (GST) realisation may have implications on fiscal deficit, which the government has pegged at 3.4 per cent of the GDP. However, some respite can come with report that the government has managed to meet the revised fiscal deficit target of 3.4 percent of the GDP after it cut last minute expenditure and rolled over fuel subsidies to make up for the shortfall in tax collection. The interim Budget presented in February revised upward the fiscal deficit target to 3.4 percent from 3.3 percent of GDP estimated earlier for 2018-19. Meanwhile, markets regulator SEBI has streamlined the procedure for issuing certified copies of orders and circulars to the parties involved and other applicants. For the parties involved in the proceedings, the regulator said certified copies of the orders passed by SEBI will be provided without charging any fee.

The US markets declined on Tuesday as investors with expectations of the first quarterly drop in earnings since 2016 were jolted by President Donald Trump's $11 billion trade salvo against the European Union and as the International Monetary Fund (IMF) cut its global growth forecast for the third time in six months. Asian markets are trading in red on Wednesday after renewed concern about a global economic slowdown and an escalation in trade tensions.

Back home, last hour buying lifted Indian equity indices higher on Tuesday, with Sensex and Nifty closing above their crucial psychological levels of 38,900 and 11,650, respectively. After a cautious start, the markets remained volatile for most part of the session, as Industry body Internet and Mobile Association of India (IAMAI) said the draft e-commerce policy may be inimical to the government's efforts of building a trillion-dollar digital economy by 2022, and is likely to severely bring down FDI flows in the sector. The association was also of the view that the process of making the policy itself was less than inclusive and open as compared to recent national-level policies like the National Digital Communications Policy 2018. Traders were also pessimistic with a report that Indian economy may be moving towards a slowdown as the country has off-late witnessed a drop in several key economic indicators. After a fall in auto sales, a shortfall in collection of direct taxes among others, now household savings in the country too have declined. However, in the last leg of the trade, key indices gained traction to settle near their intraday high points, tracking firm European markets. The market participants took encouragement with the World Bank’s latest report stating said that India's Gross Domestic Product (GDP) growth is expected to accelerate moderately to 7.5% in the fiscal year 2019-20 (FY20), supported by continued investment strengthening, particularly private-improved export performance and resilient consumption. It added that the real GDP growth is estimated at 7.2% in 2018-19. Its data for the first three quarters suggested that growth has been broad-based. Industrial growth accelerated to 7.9%, making up for a deceleration in services. Meanwhile, agriculture growth was robust at 4%. Adding enthusiasm among investors, Prime Minister Narendra Modi sought another term to set on track the transformation of the country as a developed nation by 2047 when India completes 100 years of Independence. Finally, the BSE Sensex gained 238.69 points or 0.62% to 38,939.22, while the CNX Nifty was up by 67.45 points or 0.58% to 11,671.95.