Benchmarks likely to make cautious start on Friday

Indian markets ended Thursday’s choppy session in red territory with marginal losses for second day in a row, dragged down by banks and IT majors. Today, the markets are likely to make a cautious start amid poor April auto sales data and weak cues from global markets. Investors will also be eyeing election results later this month. Traders will be concerned with the Finance Ministry’s monthly report stating that India’s economy slowed down slightly in the last fiscal due to declining growth in private consumption, slow increase in fixed investment and muted exports though it is still fastest growing major economy. It further said there is slowdown of growth in agriculture and sustained growth in industry as well as some challenges. Also, there will be some cautiousness with  the Centre for Monitoring Indian Economy (CMIE) data showing that India’s unemployment rate in April rose to 7.6%, the highest since October 2016, and up from 6.71% in March. Meanwhile, the Insolvency and Bankruptcy Board of India (IBBI) data showed that the 12 large non-performing assets (NPAs or bad loans) accounts directed by the RBI for resolution through insolvency process had total outstanding of Rs 3.45 lakh crore against their liquidation value of Rs 73,220.23 crore, while haircuts taken by creditors in case of the resolved accounts so far have been as high as 90%. There will be some reaction in aviation sector stocks with ICRA’s report stating that the pace of growth in air traffic hit a five-year low at 11.6% in fiscal 2019, pulled down by low growth of 3.9% in the March quarter as against a healthy 14.9% in the first three quarters. As per the report, domestic passenger traffic declined by 1.1% in March, overall traffic saw de-growth of 0.1% in the month as international aircraft movement dipped by 1%, while domestic aircraft movement was flat. There will be some buzz in the gems and jewellery industry stocks with the World Gold Council’s statement that India’s gold demand is expected to rise in the June quarter from a year ago due to a higher number of auspicious days for weddings and a fall in local prices ahead of a key festival. There will be lots of earnings reaction based on the performance of the companies, to keep the markets buzzing.

The US markets ended lower on Thursday for a second straight session, with weakness in petroleum-linked shares dragging the markets further below records earlier in the week. Asian markets are trading weak on Friday amid thin holiday trade as investors pared expectations for a US rate cut this year, while oil prices loitered near one-month lows on oversupply fears.

Back home, Indian equity benchmarks witnessed volatility on Thursday, with Sensex and Nifty closing below their crucial psychological levels of 39,000 and 11,750, respectively. After a negative start, key indices managed to keep their heads above water for the most part of the session, taking support with the finance ministry’s statement that Goods and Services Tax (GST) collection scaled all-time high in first month (April) of current financial year (FY20).  The total gross GST revenue collected in April 2019 is Rs 1,13,865 crore of which Central GST (CGST) is Rs 21,163 crore, State GST (SGST) is Rs 28,801 crore, Integrated GST (IGST) is Rs 54,733 crore and cess is Rs 9,168 crore. Some relief seemed among traders, with a report stating that the growth of India's eight core sectors improved marginally to 4.7% in March 2019 against 4.5% in the same month last year, helped by a broad-based recovery in sectors such as cement, refinery products, steel, and coal. But, Indian bourses failed to hold gains and ended session in red terrain amid mixed cues from global markets. Trading sentiments got hit as India Ratings and Research (Ind-Ra) in its latest report lowered India’s gross domestic product (GDP) growth projection to 7.3% for fiscal year 2019-20 (FY20), from its earlier projection of 7.5%. The key reasons for the downward revision are the prediction of lower-than-normal monsoon for 2019, continued agrarian distress and the loss of momentum in the industrial output growth, especially manufacturing and electricity. Adding more anxiety on the street, April data signaled further loss in the growth momentum across India's manufacturing sector, reflecting softer increase in new orders. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 51.8 in April from 52.6 in March. Finally, the BSE Sensex slipped 50.12 points or 0.13% to 38,981.43, while the CNX Nifty was down by 23.40 points or 0.20% to 11,724.75.