Benchmarks to make negative start tracking weakness in global markets

Indian markets recouped early losses to end flat with negative bias on Tuesday with banks coming under heavy selling pressure after Yes Bank reported a massive quarterly loss, hit by rising provisions for bad loans. Markets remain closed on Wednesday on account of International Labour Day. Today, the markets are likely to make a negative start tracking weakness in global markets. Investors will be eyeing manufacturing PMI data to be out later in the day. Traders will be concerned as India Ratings and Research marginally lowered country's Gross Domestic Product (GDP) growth projection for 2019-20 fiscal to 7.3% mainly due to below normal monsoon prediction and loss of momentum in industrial output. It had earlier projected India's GDP growth at 7.5%. However, some respite can come later in the day with the finance ministry’s statement that Goods and Services Tax (GST) collection scaled all-time high of over Rs 1.13 lakh crore in April, up from Rs 1.06 lakh crore in the previous month. Total number of summary sales return GSTR-3B filed for the month of March up to April 30 stood at 72.13 lakh. Some support may also come with report that the growth of eight core sectors improved marginally to 4.7% in March 2019 against 4.5% in the same month last year. Meanwhile, markets regulator SEBI has directed National Stock Exchange to pay more than Rs 625 crore with 12% interest from April 1, 2014 in the case of misuse of its co-location facility and barred it from the securities market for six months. SEBI has been probing alleged lapses in high-frequency trading offered through NSE's co-location facility. There will be some buzz in the cement sector stocks with ICRA’s report stating that the domestic cement demand is likely to grow by 8% this fiscal which may push the capacity utilisation to 71%. It added that the growth in demand will be driven by a likely 18-20 million tonnes per annum (mtpa) of additional production capacity during the fiscal. The auto sector stocks will also be in action, reacting to their monthly sales numbers. There will be some important result reactions too, to keep the markets in action.

The US markets declined on Wednesday after the Federal Reserve left interest rates unchanged and reiterated it will stay patient despite a recent patch of soft inflation. Asian markets are trading mixed on Thursday following weak cues from Wall Street amid markets in Japan and China were shut for holidays.

Back home, Indian equity benchmarks recovered most of their losses to end Tuesday’s trading session on flat note, with Sensex and Nifty closing slightly lower. After a cautious start, key indices remained under a grip of bears during whole day, affected by India Meteorological Department’s (IMD) statement that pre-monsoon rainfall from March to April has recorded 27% 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. Anxiety remained among investors, amid a report indicating 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. Weakness persisted during the second half of the day, with a private report stating that surging global oil prices will pose a first big challenge to India's new government, whoever wins an election now underway, especially as domestic prices have been allowed to lag, meaning consumers are in for a painful surge as they catch up. However, markets managed to stage recovery in the last leg of the trade, supported by Union minister Suresh Prabhu’s statement that the country is working on district-based developmental model to achieve aggregate growth. He said if the national growth was at 6% and those of the districts was 4%, the aggregate growth would be 10%. Meanwhile, in order to improve margins and profit, Engineering Export Promotion Council (EEPC) of India has urged engineering exporters to adopt intellectual property rights (IPR). Finally, the BSE Sensex slipped 35.78 points or 0.09% to 39,031.55, while the CNX Nifty was down by 6.50 points or 0.06% to 11,748.15.