Benchmarks likely to make cautious start tracking mixed Asian cues

Indian markets ended Thursday’s choppy trading session higher with gains of over 0.70 per cent each, mainly due to late hour buying by investors. Today, the start of last trading day of week is likely to be cautious tracking mixed cues from Asian peers and ahead of key exit poll for the current Lok Sabha elections due on May 19 evening after the last phase of voting. Investors may also remain on the sidelines ahead of outcome of 17th Lok Sabha election on May 23. However, some support may come later in the day with a report that the ongoing trade war between the US and China will help India tap export opportunities in both the countries in areas such as garments, agriculture, automobile and machinery. Traders may take note of report that Finance Commission held discussions with the finance ministry on fiscal and economic management as well as rationalisation of expenditure related to centrally sponsored schemes. The 15th Finance Commission observed that the GDP numbers suggest continued high growth over the medium term even though there have been fluctuations within the overall global trend. Meanwhile, the Reserve Bank of India (RBI) made it mandatory for NBFCs with assets size of more than Rs 50 billion to appoint a chief risk officer (CRO) to ensure highest standards of risk management. The RBI said that the CRO shall be a senior official in the hierarchy of an NBFC and shall possess adequate professional qualification or experience in the area of risk management. The CRO should be appointed for a fixed tenure with the board's approval. There will be some reaction in banking sector stocks with a private report that public sector banks are demanding a capital infusion of Rs 50,000 crore in the ongoing financial year 2019-20. The Finance Ministry had infused Rs 1.06 lakh crore as bank recap during the previous financial year as against the budgeted target of Rs 65,000 crore. There will be some buzz in the auto sector stocks with Additional Chief Secretary and Commissioner of Commercial Taxes, Dr. T.V. Somanathan’s statement that the improvement in economic efficiency from the introduction of Goods and Services Tax (GST) is one of the reasons for slowdown in commercial vehicle sales. There will be lots of earnings reaction to keep the markets buzzing.

The US markets ended higher for third straight session on Thursday following solid economic data and good earnings from Dow members Cisco and Walmart. Asian markets are trading mixed on Friday as upbeat US economic data and solid corporate results aided sentiments, though, US-China trade tensions kept the markets in check.

Back home, equity benchmarks bounced back on Thursday, with Sensex and Nifty reclaiming their crucial psychological levels of 37,300 and 11,250, respectively. After a cautious start, key indices remained choppy for the most part of the day, as India’s merchandise exports fell to a four-month low of 0.64% in April, 2019 as compared to same period of last year, as shipments of engineering goods, gems and jewellery, leather and other products declined, widening the trade deficit to a five-month high. The trade deficit, a gap between exports and imports, expanded to $15.33 billion in April 2019 as compared to $13.72 billion in April 2018. Adding some anxiety among traders, NSE imposed fines on 250 companies and the penalty was in the range of Rs 1,000 to Rs 4.5 lakh for non-compliance with various listing regulations for the quarter ended March 31, 2019. However, last leg buying helped the markets to settle the session near day’s high points. Market participants got comfort, as the Reserve Bank of India released a vision document for ensuring a safe, secure, convenient, quick and affordable e-payment system as it expects the number of digital transactions to increase more than four times to 8,707 crore in December 2021. Investors were seen taking a note of the PHD Chamber of Commerce and Industry’s (PHDCCI) statement that a decisive government at the Centre would be crucial to push India's growth trajectory to the next level and further improve the ease of doing business scenario. Some support also came with reports that trade body Confederation of Indian Industry (CII) would focus on enhancing industry’s competency and employment generation under its seven point charter for the southern region this year. Finally, the BSE Sensex gained 278.60 points or 0.75% to 37,393.48, while the CNX Nifty was up by 100.10 points or 0.90% to 11,257.10.