Benchmarks likely to make weak start on Tuesday

Indian markets before going for long weekend settled Friday’s trading session in green territory, with gains of around a percent each, on the back of rally in metal banking and Oil & Gas stocks amid easing global crude oil prices. Markets remain closed on Monday on account of Lok Sabha Elections 2019 in Maharashtra. Today, the start of last trading day of the month is likely to be weak amid lackluster cues from Asian peers. There will be cautiousness with the India Meteorological Department’s (IMD) statement that pre-monsoon rainfall from March to April, a phenomenon critical to agriculture in some parts of the country, has recorded 27 per cent deficiency. The IMD recorded 43.3 millimetres of rainfall across the country from March 1 to April 24 as against the normal precipitation of 59.6 millimetres. This was 27 per cent less of the Long Period Average (LPA). Traders will also be concerned about a private report stating that the decline in economic growth momentum in October-December quarter of FY19 is likely to continue. As per the report, subdued consumption demand and election related uncertainty is expected to weigh on India's industrial production. However, traders may take some support later in the day with a report that foreign investors were net buyers in the Indian capital markets for the third straight month in April, pouring in Rs 17,219 crore on favourable macroeconomic conditions and ample liquidity. Some support may also come with union minister Suresh Prabhu stating that India is working on district-based developmental model to achieve aggregate growth. For this, six districts have been selected in different parts of the country. Meanwhile, India has notified the inter-governmental agreement with the US for exchange of country-by-country (CbC) reports on multinational companies regarding income allocation and taxes paid in order to help check cross-border tax evasion. Besides, the Model Code of Conduct for the Lok Sabha polls is unlikely to have any bearing on issuance of a revised framework for resolution of stressed assets by the Reserve Bank and the guidelines are expected to be announced before May 23. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended marginally higher on Monday buoyed by upbeat consumer spending data and a largely positive earnings. Asian markets are trading mostly lower on Tuesday as investors await a US Federal Reserve policy decision for clues of whether it will continue to take a patient approach to interest rate policy.

Back home, equity bourses bounced back on last trading day of the week, with Sensex and Nifty reclaiming their crucial psychological levels of 39,000 and 11,750, respectively. The markets made a firm start of the day, aided by the Reserve Bank of India’s (RBI) latest data report that bank credit rose by 14.19% to Rs 96.45 lakh crore, while deposits grew 10.60% to Rs 125.30 lakh crore in the first fortnight ended on April 12. In the year ago fortnight, deposits were at Rs 113.29 lakh crore and advances stood at Rs 84.46 lakh crore. Adding comfort among the investors, RBI Governor Shaktikanta Das said that the country's apex bank is strengthening its surveillance framework in the face of growing significance of FinTech innovations and their interface with the financial sector. He said that recent developments in FinTech have given a fresh impetus to financial inclusion process in the country and policy efforts have been directed in recent years to put in place a state of the art national payments infrastructure and technology platform. Markets rallied further in late hours to settle near their intraday high points, on the back of heavy buying done by traders. Trading sentiments on the street got improved with IBBI Chairperson M S Sahoo’s statement that resolution plans under IBC have yielded 200 per cent of liquidation value for creditors in addition to rescuing viable firms. He also noted that this is significantly better as compared to the previous regime which yielded a recovery of 25 per cent for creditors through a process which took about five years and entailed a cost of 9 per cent. Markets participants also remained positive with a private report stating that private equity (PE) and venture capital (VC) investments hit an all-time high of $7 billion in March, as high-voltage action by global investors like Canada’s Brookfield and Singapore’s GIC on street continues unabated despite the ongoing general elections. Finally, the BSE Sensex gained 336.47 points or 0.87% to 39,067.33, while the CNX Nifty was up by 112.85 points or 0.97% to 11,754.65.