Markets to make pessimistic start of new week

Extending southward journey for third straight session, Indian markets gave up all of their gains and ended marginally lower on Friday following a sudden sell-off in the dying hours of the trade amid weakness in IT bluechips. Today, the start of new week is likely to be pessimistic tracking weakness in the Asian peers as the trade war reignites. Investors will be eyeing Services PMI data for the month of April to be out later in the day. Market participants will also be awaiting India's industrial production (IIP) data for the month of March, which is scheduled to be released later in the week. There will be some cautiousness with report that in a first in recent history of tax filings, income tax e-filings in FY2019 have dropped. Income tax e-filings in FY 2018-19 was 6.68 crore, down from 6.74 crore in the previous fiscal. This is surprising given that post demonetisation it was expected that the tax base would continue to increase. However, traders may take some support later the day with the Reserve Bank of India’s (RBI) data showing the country's foreign exchange reserves soared by $4.368 billion to $418.515 billion in the week to April 26, helped by the second dollar-rupee swap auction. In the swap auction conducted on April 23, the RBI had received bids worth $18.65 billion against $5 billion on offer. It accepted just five bids worth $5 billion. There will be some buzz in the banking sector stocks with a private report that banks have taken a huge 57 percent haircut in the 94 large accounts worth Rs 1.75 lakh crore which were resolved in FY19, recovering just Rs 75,000 crore or only 43 percent of the admitted claims. There will be some reaction in TV broadcasting industry related stocks with report that Telecom Regulatory Authority of India (TRAI) has roped in state-owned Broadcast Engineering Consultants India (BECIL) for conducting audits to ensure that cable TV and DTH companies are complying with its new regulatory norms. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets rose on Friday after surprisingly the data showed strong payroll gains in April and the lowest unemployment rate since 1969. Asian markets declined in early trade on Monday as trade negotiations between China and the US deteriorated suddenly, reversing apparent progress made in recent months.

Back home, Indian equity benchmarks ended the last trading day of week on negative note, on the back of mixed cues from other Asian markets. After a cautious start, the markets added gains to remain in green for the most part of day, aided by a report stating that India was the biggest recipient of funds from Asian Development Bank last year and would continue to get sovereign loans in excess of $3 billion in 2019 as well. The multilateral funding institution committed $3 billion in sovereign loans to India in 2018, the highest level of assistance since sovereign operations began in the country in 1986. Investors also got comfort with Union minister Nitin Gadkari’s statement that development has always been the top agenda of the government and the Centre has given impetus to infrastructure projects in the last five years. But, in the last leg of the trade, markets erased all the gains to settle in red terrain, as the Finance Ministry’s monthly report showed 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. Adding anxiety on the streets, the Reserve Bank of India (RBI) study report said that inflation forecasts by the central bank have gone awry only at time of low food inflation. In most other periods, forecasts have remained almost close to actual, and in line with the trend in the forecast of other central banks. Finally, the BSE Sensex slipped 18.17 points or 0.05% to 38,963.26, while the CNX Nifty was down by 12.50 points or 0.11% to 11,712.25.