Markets likely to make gap-up opening of new week

Indian markets ended higher for second straight session on Friday on the back of buying by investors ahead of exit polls for the Lok Sabha elections. Today, the markets are likely to make gap-up opening of the new week after exit polls of the 2019 Lok Sabha elections projected BJP-led National Democratic Alliance (NDA) to win a comfortable majority. Besides, investors will be looking forward the outcome of 17th Lok Sabha election on May 23. Some support will also come with the Reserve Bank of India’s (RBI) data showing that the country's foreign exchange reserves rose by $1.368 billion to reach $420.055 billion in the week to May 10 on account of a rise in foreign currency assets. In the previous week, the reserves had increased by $171.9 million to $418.687 billion. Traders may take note of report that the GST Council is likely to consider next month a proposal for setting up a national bench of the Appellate Authority for Advance Ruling (AAAR) to reconcile the contradictory orders on similar issues passed by AARs in different states, a move aimed at providing certainty to taxpayers. However, there may be some cautiousness with Economic Advisory Council to the Prime Minister (EAC-PM) member Shamika Ravi’s statement that India needs to make all efforts to reach double digit growth and should not treat 7 percent expansion as the new normal. Traders may also be concerned about India Meteorological Department (IMD) data showing that pre-monsoon rainfall from March to May, a phenomenon vital to agriculture in several parts of the country, has recorded a deficiency of 22 per cent. The IMD recorded 75.9 millimetres of rainfall from March 1 to May 15 as against the normal rainfall of 96.8 millimetres, which comes to around minus 22 per cent. There will be some buzz in the port sector stocks with report that India’s 12 major ports recorded 5.65 percent rise in cargo handling to 60.07 million tonnes (MT) in April this fiscal, mainly due to higher demand for coal, petroleum, oil and lubricants. Also, there will be some reaction in the power sector stocks with report that coal despatches by Coal India to the power sector rose marginally by 1 per cent to 40.7 million tonnes in April 2019 compared to 40.3 million tonnes in the year-ago month.

The US markets settled lower on Friday as worries over US-China trade relations more than offset strong consumer data and other more conciliatory trade developments. Asian markets are trading mostly in red on Monday as investors tried to catch their breath following another week of escalating trade tensions between the United States and China.

Back home, Indian equity benchmarks traded jubilantly on Friday, with Sensex and Nifty closing higher by over 500 and 100 points, respectively. Markets start the session on positive note, as the 15th Finance Commission, chaired by N K Singh, observed that the Gross Domestic Product (GDP) numbers suggest continued high growth over the medium term despite there have been fluctuations within the overall global trend. The Commission also noted that the revenue projections on direct taxes are healthy though on indirect taxes, there have been periodic fluctuations. Traders were optimistic with a report showing 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. Key indices further gained momentum in noon deals to settle near their intraday high points, as adding confident among market participants, Union Commerce Minister Suresh Prabhu said that strategic investments based on a clear sectorial analysis will further strengthen India's economic growth. He also emphasized on focusing on district-development led growth to drive inclusivity in the society. Some support also came with a private report that India-Mexico Business Chamber (IMBC) has been inaugurated with the basic objective to strengthen the growing India Mexico economic and commercial linkages. Market participants paid no heed towards credit rating agency Ind-Ra’s latest report stating that the rise in US-China trade tensions could lead to dumping of Chinese goods and weaker flow of foreign investment from the United States to emerging markets, including India. Finally, the BSE Sensex gained 537.29 points or 1.44% to 37,930.77, while the CNX Nifty was up by 150.05 points or 1.33% to 11,407.15.