Benchmarks likely to make cautious start on Tuesday

Indian markets extended their losses for second straight session and ended lower with cut of over a percent each on Monday as concerns about rising crude oil prices in the international market dented investors sentiments. Today, the markets are likely to make cautious start amid weak global cues. Investors may also remain on the sidelines as the third phase of polling for 2019 Lok Sabha elections begin. There will be some cautiousness with the Employees State Insurance Corporation’s (ESIC) latest payroll data showing that job creation dropped by 1.73% in February to 15.03 lakh compared to 15.30 lakh in the same month last year. The data showed that during September 2017 to February 2019, nearly 3 crore new subscribers joined the ESIC scheme. Traders will also be concerned about a private report indicating that the surging price of oil is an Achilles heel for the Indian economy, complicating its inflation, current account, fiscal balance and currency outlook. It added that for bond markets, the worry is two-pronged with the concern being that high oil prices might pose a fresh risk to the fiscal math, if subsides return, by extension requiring higher borrowing. Also, pipeline inflation risks due to high oil prices further raise the hurdle for rate-cuts. There will be some buzz in the coal industry related stocks with a report that India's coal import increased by 8.8% to 233.56 million tonnes in 2018-19, as compared to 214.61 MT in 2017-18. There will be some reaction in aviation industry stocks with the Directorate General of Civil Aviation (DGCA) data showing that high air fares and capacity constraint decelerated India's domestic air passenger traffic growth in March. As per the data, the air passenger traffic growth rate in March rose to a mere 0.14% to 115.96 lakh from 115.80 lakh reported for the corresponding month of the previous fiscal. There will be some result announcements to keep the markets in action.

The US markets settled mostly higher on Monday as investors face a big week for corporate quarterly results and economic data following an extended holiday weekend. Asian markets are trading mostly lower on Tuesday, with concerns China may slow the pace of policy easing curbing the market’s enthusiasm.

Back home, Indian equity benchmarks witnessed over a percent fall on Monday, with Sensex and Nifty breaching their psychological levels of 38,700 and 11,600, respectively. The start of the day was negative, amid a private report stating that business sentiments continue to decline for the country's financial and macro-economic conditions in the second quarter of the year compared to the same period a year before. As per the report, Composite Business Optimism Index stands at 78.4 during Q2 2019 as against 85.0 during Q2 2018 marking a 7.7% decline. The street also got cautious, with reports that National transporter Indian Railways account for nearly three-fifths of 344 central sector projects that are facing huge cost overrun due to delay in implementation for various reasons. The latest flash report of the Statistics and Programme Implementation Ministry (MOSPI) for December 2018 showed that total cost overrun of 205 delayed railway projects is whopping Rs 2.21 trillion. Key indices remained under the grip of bears throughout the day and ended the trading session in red terrain. Domestic sentiments also got hit, after India has again missed the target of becoming an electricity-surplus nation by a whisker as its peak power deficit stood at 0.8 percent and the overall energy deficit remained 0.6 percent in the financial year 2019. Adding anxiety on the street, the Central Board of Direct Taxes (CBDT) directed the Income-Tax Department to initiate penalty proceedings by June 30 against non-filers and drop filers of tax returns. According to the non-filer monitoring system (NMS) of the I-T department, data for 20.4 million non-filers has been obtained between 2013 and 2017, of which 2.5 million are those who are inconsistent- popularly known as dropped filers. Traders paid no heed towards Prime Minister Narendra Modi’s statement that the number of registered traders under the Goods and Services Tax (GST) has almost doubled, and brought transparency to the system. Finally, the BSE Sensex slipped 495.10 points or 1.26% to 38,645.18, while the CNX Nifty was down by 158.35 points or 1.35% to 11,594.45.