Markets to make negative start on sluggish global cues

The markets registered eighth consecutive day fall on Friday, with Nifty ending below 11,300, as global markets remained under pressure. Today, the start of the session is likely to be on negative side following subdued other Asian markets, amid growing uncertainty over US-China trade talks. Investors will be looking ahead to macroeconomic data such as Consumer Price Index (CPI) to be announced after the market hours.  Traders will remain concern after the Ministry of Statistics and Programme Implementation data has showed that industrial production in volume terms declined in March for the first time in 21 months - by 0.1 per cent - against a growth rate 0.1 per cent in the previous month as manufacturing continued to contract for the second month in a row and mining growth was muted. The March numbers pulled down the index of industrial production (IIP) to 3.6 per cent in 2018-19 against 4.4 per cent in the previous year. There will be some cautiousness too with a recent technical study by the National Sample Survey Office (NSSO) for July 2016 – June 2017 on the services sector enterprises has again raised questions about India’s national income data & quality of the country’s growth estimates. However, traders may take some support later in the day on report that in an attempt to bring down the compliance burden on companies, especially the small and medium enterprises (SMEs), the commerce ministry has urged the ministry of corporate affairs (MCA) to explore avenues where firms can opt for self-certifying their returns as well as clubbing all the returns to be filed in a year into a single annual return. There will be some buzz in the Steel stocks after the government has decided to set up a committee under the Director General of Foreign Trade (DGFT) to look into availability of steel at competitive prices for engineering goods exporters. The committee will submit its report to steel and commerce ministries within two months. It will suggest measures which will be a win-win situation for both steel producers and engineering exporters.  Also, the banking stocks will keep buzzing with the Reserve Bank of India’s (RBI) report that the slowdown in bank deposit growth in the recent period alongside a revival of credit demand raised concerns about a structural liquidity gap in the system, possibly amplified by substitution effects of small savings and mutual funds on bank deposits in the aftermath of demonetization.

The US markets ended higher on Friday after Treasury Secretary Steven Mnuchin wrapped up a second day of trade talks, calling the discussions constructive. Asian markets traded lower in early deals on Monday  on growing uncertainty over whether the United States and China will be able to reach a deal to end their trade war after Washington sharply hiked tariffs.

Back home, Friday turned out to be yet another lousy day for Indian equity markets, with the Sensex and the Nifty closing lower by around 100 and 25 points, respectively. Key indices made a positive start of the day, as Engineering exporters’ apex body Engineering Export Promotion Council of India (EEPC) urged the Reserve Bank of India (RBI) to facilitate easy and cheaper bank loans mainly for the Micro, Small, and Medium Enterprises (MSMEs). EEPC also recommended that the banks should not ask for external credit rating as they are doing internal rating and banks be advised not to charge loan application processing and credit limit renewal fee. Sentiments were also optimistic with Corporate Affairs Secretary Injeti Srinivas’ statement that the corporate affairs ministry maintained 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. However, markets soon turned volatile to settle the day in red terrain, amid reports that India inflation likely crept up slightly to a six-month high in April, driven mainly by food prices, although holding below the Reserve Bank of India's medium-term target of 4 percent for the ninth straight month. Market participants also got worried, as the International Monetary Fund (IMF) warned that trade tensions and the exchange of tariffs between the United States and China pose a threat to the global economy. Some worries also came with the Association of Mutual Funds in India’s (AMFI) data report stating that net inflows into equity mutual funds plunged 61 per cent to Rs 4,609 crore in April compared to the previous month, as volatility in stock markets and uncertainty over the outcome of general elections impacted investor sentiments. In March, net inflows into equity funds stood at Rs 11,756 crore. Finally, the BSE Sensex slipped 95.92 points or 0.26% to 37,462.99, while the CNX Nifty was down by 22.90 points or 0.20% to 11,278.90.