Markets likely to make cautious start on Thursday

Indian markets ended sharply lower on Wednesday, after a day's breather, mainly on account of late hour sell-off as fears of worsening US-China trade tensions prompted profit booking. Today, the markets are likely to make a cautious start amid mixed cues from Asian peers. There will be some cautiousness with report that India’s export growth slid to a four-month low of 0.64% in April as shipments of engineering goods, gems and jewellery, leather and other products declined, widening the trade deficit to a five-month high. Imports increased by 4.5%, the highest growth in the last six months as crude oil and gold shipments shot up in the month. Also, traders will be concerned about report monsoon rains are expected to hit Kerala on June 6, five days after its normal onset date. The India Meteorological Department (IMD) also said the southwest monsoon arrival over the State is likely to be slightly delayed. The agriculture in India is heavily dependent on the monsoon rains due to lackluster irrigation facilities. Meanwhile, the corporate affairs ministry has amended the rules pertaining to incorporation of companies to provide more clarity and uniformity in choosing names for the companies. The ministry has brought in amendments to the Companies (Incorporation) Rules, 2014. The move also comes against the backdrop of instances where applications by companies for registering their names have been rejected due to various reasons, including trademark issues and proposed names being too general. There may be some reaction in sugar sector stocks with the US Department of Agriculture’s (USDA) statement that India’s sugar production is likely to decline 8.4% to 30.3 million tonnes for the second straight year in the 2019-20 marketing year that would begin from October because of likely fall in sugarcane output. There will be some buzz in the power sector stocks with the Central Electricity Authority estimation that power generation from thermal, hydel and nuclear plants is expected to grow 6.5% this fiscal, nearly double of last year’s rise of 3.5%. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended higher on Wednesday on hopes that thawing trade tensions will boost the outlook for the world economy. Asian markets are trading mixed on Thursday on reports that US President Donald Trump is planning to delay tariffs on auto imports.

Back home, after a sigh of relief in the previous trading session, Indian equity benchmarks again bled on Wednesday, with Sensex and Nifty closing lower by losses of over half a percent each. After a firm start, key indices remained positive for the most part of the day, aided by rating agency Crisil’s latest report stating that recovery of stressed assets through Insolvency and Bankruptcy Code (IBC) doubled to Rs 70,000 crore in 2018-19, as against Rs 35,000 crore recovered using other resolution mechanism including Debt Recovery Tribunal (DRT), Securitisation and Reconstruction of Financial Assets (Sarfaesi), Enforcement of Securities Interest Act, and Lok Adalat. The street took encouragement with a private report that the Indian private equity (PE) market remained a hotbed for deal making in 2018 with investments across 793 deals at $26.3 billion, which was the second highest in the last decade in terms of total investment value. However, the markets turned volatile during late afternoon session, mirroring weak European markets. Markets witnessed heavy selling in last leg of trade which dragged both the major indices near intraday lows, as domestic sentiments got hampered with a private report stating that venture investments in the country declined marginally to $26.3 billion in 2018, even though there was a surge in number of deals announced. Investments by venture capital and private equity funds in the country declined in 2018 from $26.8 billion in the previous year. Besides, market participants also got cautious, after domestic rating agency India Ratings said that a fall in recoveries due to weak property markets in metros, coupled with rising delinquencies has led to weakening of the loans against property (LAP) segment for financiers. It further noted that other segments, especially commercial vehicle loans which were not doing so good recently, are showing signs of improvement. Finally, the BSE Sensex slipped 203.65 points or 0.55% to 37,114.88, while the CNX Nifty was down by 65.05 points or 0.58% to 11,157.00.