Benchmarks to open slightly in green on Tuesday

Indian markets continued their rally for third straight session on Monday and settled at record highs, with gains of around 4% each, after exit polls predicted the return of the Narendra Modi-led National Democratic Alliance (NDA) to power. Today, the start is likely to be slightly in green, extending precious session’s rally. Some support will come with IHS Markit report stating that India’s economic policy will continue to focus on maintaining strong economic growth and creating jobs for the country’s large and growing population. It added that the government will also focus on the expansion of already announced policies including infrastructure investment, the Goods and Services Tax (GST) rationalisation and financial sector regulations. Meanwhile, the Food Safety and Standards Authority (FSSAI) has permitted small organic producers, having an annual turnover of over Rs 12 lakh, to sell their produce directly to end consumers without certification till April 2020, but will not be able to use Jaivik Bharat logo on their products. The Jaivik Bharat logo is an identity mark to distinguish organic products from non-organic ones. Besides, SEBI came out with a framework for Innovation Sandbox that will help provide financial technology firms and unregulated market participants an environment to test their new solutions with markets data. However, some cautiousness may come with report that rising trade tensions have prompted the World Trade Organization (WTO) to dim its prospect for trade growth in the second quarter of the 2019 calendar year. The WTO said world trade growth is likely to remain weak into the second quarter of 2019. It pointed towards falling levels of growth in international air freight, automobile production, sales and trade in agriculture raw materials. There will be some buzz in the power sector stocks with rating agency ICRA’s statement that power regulator, the Central Electricity Regulatory Commission (CERC) allowing a tariff relief to independent power projects (IPP) affected by domestic coal shortfall is positive for the power generation segment. There will be some reaction in infrastructure sector stocks with the Reserve Bank of India’s (RBI) data showing that bank credit to infrastructure sector grew by 18.5 per cent to Rs 10.55 lakh crore as of 2018-19, the highest since 2012-13 fiscal. Outstanding bank credit to the sector was Rs 8.91 lakh crore as at March 2018. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended in red territory on Monday as souring US-China trade relations continued to weigh on sentiment, with selling pressure in technology stocks weighted on markets. Asian markets are trading mostly lower on Tuesday on mounting worries the White House's black-listing of Chinese telecom giant Huawei Technologies could further inflame already tense relations between the Washington and Beijing.

Back home, rising for the third session in a row, Indian equity benchmarks settled at record closing highs on Monday, after exit polls predicted win for Bharatiya Janata Party-led National Democratic Alliance (NDA) in the recently concluded general elections. After a fabulous start, key indices remained in the grip of bulls throughout the session, aided by the Reserve Bank of India’s (RBI) data report 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 remained optimistic amid reports that the government is considering various options to adequately empower the Reserve Bank of India (RBI) to deal with banks' stressed assets under the Insolvency and Bankruptcy Code following the Supreme Court order, quashing February 12 circular of the central bank. Markets maintained gaining momentum in the second half of the trading session, despite weak cues from European markets. Market participants got comfort with a private report stating that Indian retail real estate sector attracted private equity investment worth $1.2 billion during 2017-18 calendar years, double from the previous two years. The report attributed the sharp rise in private equity (PE) inflow to further liberalisation in FDI policies such as 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail under the automatic route. The street paid no heed towards India Meteorological Department’s (IMD) latest report indicating that pre-monsoon rainfall in the country from March to May recorded a deficiency. 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%. Finally, the BSE Sensex gained 1421.90 points or 3.75% to 39,352.67, while the CNX Nifty was up by 421.10 points or 3.69% to 11,828.25.