Markets to make negative start tailing weak global cues

Investors on Tuesday went on a last-hour selling spree to bring down the markets which ended with substantial losses. Today, the start of the session is likely to be on negative side amid global sell-off on worries of US-China trade conflict. Traders will remain concern on report that US Commerce Secretary Wilbur Ross warned any retaliatory tariff by India in response to the United States' planned withdrawal of trade privileges will not be appropriate under WTO rules. India has raised the prospect of higher import duties on more than 20 US goods if US President Donald Trump presses ahead with a plan announced in March to end the Generalized System of Preferences (GSP) for India. India is the biggest beneficiary of GSP, which allows preferential duty-free imports of up to $5.6 billion from the South Asian nation. However, some respite can come later in the day on report that Commerce and Industry Minister Suresh Prabhu has made a case for a government-to-government agreement between India and the US to facilitate private companies in both the countries.  He also expressed hope that issues being faced by businesses in India and the US can be sorted out in a way that benefits both the countries. Beside, traders will be getting some encouragement with private report that the number of business-to-business (B2B) startups has jumped four times to 3,200 in 2018 from 800 in 2014, enabling faster growth of the ecosystem, attracting investments worth USD 3.7 billion from USD 797 million, during the period. There will be buzz in the IT stocks with report that India's IT and business services market May grow by over eight per cent to reach $ 13.1 billion by the year-end and expand further to $ 14.3 billion by 2020. The IT services market is slated to reach $ 10 billion by December 2019, growing at 9.1 per cent annually. There will also be some buzz in solar stocks on report that India needs faster implementation of roof-top solar projects to meet the 175 gigawatts of renewable energy target by 2022. There will be lots of earnings reaction based on the performance of the companies to keep the markets buzzing.

The US markets settled lower on Tuesday after the US confirmed that tariffs on imported goods from China could be raised by the end of the week. Asian markets traded lower in early deals on Wednesday as the global growth concerns grew. 

Back home, Indian equity benchmarks witnessed sharp fall on Tuesday, with both the larger peers, the Sensex and Nifty, closing below their crucial psychological levels of 38,300 and 11,500, respectively. After a firm start, key indices remained positive for the most part of the session, aided by a private report stating that if the BJP-led National Democratic Alliance (NDA) gets a second term, it will provide liquidity support to non-banking financial companies (NBFCs) that are facing cash crunch for a year now. Traders were optimistic, as the government said that India and the United States will engage regularly to resolve outstanding trade issues. Both sides agreed to deepen economic cooperation and bilateral trade by ensuring greater cooperation amongst stakeholders, including Government, businesses and entrepreneurs. However, the markets erased all of their gains in the last leg of the trade to end in red terrain, impacted by S&P Global Ratings’ latest report stating that goods and Services Tax (GST) regime in India is not likely to reduce the deficits of state governments significantly, amid large and growing expenditure mandates for the social sector as well as capital spending. Some concerns also came with a private report stating that the weak volume growth reported by consumer staple companies in Q4, FY19 underlines the slowdown seen in housing over the past five to six years and automobiles over the past year. The next government may have its task cut out to revive flagging economic growth. Adding more worries among traders, the head of the International Monetary Fund said that fresh trade tensions between the United States and China were the main threat to the world economy. Finally, the BSE Sensex slipped 323.71 points or 0.84% to 38,276.63, while the CNX Nifty was down by 100.35 points or 0.87% to 11,497.90.