Indian equity markets to make cautious start on Friday

Falling for the seventh consecutive session, Indian equity markets ended lower on Thursday amid escalating trade tensions between the US and China.  Today, the start is likely to remain cautious as investors wait to see if US President Donald Trump hikes tariff on Chinese imports. Investors will be looking ahead to macroeconomic data such as Index of Industrial Production (IIP) to be announced today after the market hours. However, some support may come later in day with Corporate Affairs Secretary Injeti Srinivas stating that the corporate affairs ministry maintains a fairly reliable database that is not a black box. He emphasized that it is up to statistical authorities to decide on which data is representative for GDP calculation. Against the backdrop of concerns over data used for calculating GDP numbers, Srinivas said that the ministry's MCA 21 portal is a trust-based system as the information reported there are company disclosures. Meanwhile, India has sought greater access for agricultural and animal husbandry products in Chinese market to boost exports and bridge trade deficit with the neighbouring country. Traders may take note of a report that the 15th Finance Commission will reconcile data from various public sources to come up with its own conclusion of a reliable economic data. The real estate stocks will keep buzzing on report that the GST Council extended by 10 days till May 20 the deadline for realtors to opt for old GST rates with input tax credit for ongoing projects or shift to new lower tax rates. The GST Council had in March allowed real estate players to shift to 5 per cent GST rate for residential units and 1 per cent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019.  There will be some buzz in the Tea stocks on private report that India’s tea exports to Pakistan are expected to increase to 20-25 million kg in 2019 from 15.83 million kg in the previous year.

The US markets ended lower on Thursday amid renewed trade concerns following tough talk from Trump ahead of two days of US-China trade talks in Washington. Asian market traded mostly higher in early deals on Friday despite increased US tariffs on Chinese goods that were due to kick in later today.

Back home, Bears continued to dominate Dalal Street for seventh straight session on Thursday, with the Sensex and the Nifty closing below their crucial psychological levels of 37,600 and 11,350, respectively. The start of day was sluggish, as the Reserve Bank of India warned of the growing risks to fiscal consolidation of the states as their finances are saddled with farm loan waivers, income support schemes and the Ujwal Discom Assurance Yojana (UDAY) bonds for their power distribution companies. Adding more worries among traders, Former Finance Minister P Chidambaram said that macro-economic indicators confirm that the Indian economy has entered a disastrous phase of slowdown. He further said the Finance Ministry's report is a damning indictment of the state of the economy in the country. The street took a note of the statistics ministry’s statement that an official committee will examine the NSS technical report on services sector enterprises, which has raised questions over the GDP data. Key equity benchmarks settled the trading session in red terrain but staged some recovery in the last hour of the trade, supported by IHS Markit's statement that the Reserve Bank of India (RBI) is likely to cut interest rates one more time in June before rising inflation pressures and elevated fiscal deficits leave little room for further accommodation in rest of the year. RBI had cut interest rate by 25 basis points each in February and April to boost economic growth. Markets participants also got some relief with Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Ramesh Abhishek’s statement that India is hoping to further improve its rank in World Bank’s Doing Business report this year especially in indicators of paying taxes, insolvency resolution, trading across borders, issue of building permits and starting a business. Finally, the BSE Sensex slipped 230.22 points or 0.61% to 37,558.91, while the CNX Nifty was down by 57.65 points or 0.51% to 11,301.80.