Benchmarks likely to make optimistic start on Friday

Indian markets erased early gains and ended the session in red territory on Thursday as investors booked profits after stocks soared to record highs after BJP’s strong showing in the Lok Sabha polls. Today, the markets are likely to make optimistic start after a historic mandate won by the Narendra Modi government. Election commission data showed Modi’s National Democratic Alliance has secured around 350 seats, with BJP alone winning around 303 seats in the 2019 general elections. Besides, fall in crude oil prices may also aid the markets sentiment. Some support will come with Fitch Ratings’ statement that the Bharatiya Janata Party’s (BJP) apparent landslide victory is likely to improve business sentiment and outlook for private investment. It said that from a credit rating perspective, Fitch would focus on the extent of the next government's efforts to improve India's weak fiscal finances. Besides, India Inc has welcomed the thumping majority accorded to the BJP in Lok Sabha Elections 2019. At the same time, head honchos of the corporate world have called for strong economic reforms, including measures to boost the agrarian economy and manufacturing sector. Traders may take note of Moody's statement that its credit view on India will depend on policies of the new government and expressed hope that the country would continue with its fiscal consolidation plan. However, there may be some cautiousness amid negative global sentiment. Meanwhile, markets regulator SEBI has levied a total fine of over Rs 39 lakh on five entities for indulging in fraudulent trades in the illiquid stock options segment of BSE. There will be some buzz in the aviation sector stocks with ICRA’s report that the grounding of Jet Airways has impacted industry's capacity by as much as 14%, resulting in a 4.2% fall in domestic air traffic to 10.99 million in April. There will be lots of earnings announcements too, to keep the markets in action.

The US markets declined on Thursday, with losses of over a percent, after the latest flare-up in US-China trade tensions damped investors’ expectations of a near-term resolution between the world’s two biggest economies. Asian markets are trading mixed on Friday on worries the US-China trade spat was developing into a more entrenched strategic dispute between the world's two largest economies.

Back home, profit booking dragged Indian equity benchmarks in red on Thursday, with Sensex and Nifty closing below their crucial psychological levels of 38,900 and 11,700. The start of the day was fabulous, buoyed by the vote count leads that showed Narendra Modi-led NDA getting a decisive majority. In morning deals, key indices hit their record high peaks and remained positive for the most part of the session, as India Inc expressed hope that a stable government at the centre will boost growth in the country and lead to higher foreign fund inflows as trends pointed to BJP and allies returning to power with a thumping majority. Market participants also remained positive with Niti Aayog Vice Chairman Rajiv Kumar’s statement that the think tank is working on the economic agenda for the new government where the focus will be on achieving long term sustainable growth and boosting private investments in the country. However, the market failed to hold on to their gains and settled the day in red terrain, tracking weak global markets. Anxiety spread among investors, with a private report stating that the value of merger and acquisition deals announced in April stood at $735 million (over Rs 5,100 crore), a decline of 96 per cent from the year-ago period. According to a report, in April last year, the total M&A deal value stood at $19,142 million. Traders also got cautious with another private report indicating that foreign direct investment (FDI) in India has been declining, even though recent US-China trade tensions and the increasing working population should ideally make the world's fastest-growing economy attractive for investors. This could be because of investors' pre-election nerves and also because of recent protectionist measures taken up by India. Finally, the BSE Sensex lost 298.82 points or 0.76% to 38,811.39, while the CNX Nifty was down by 80.85 points or 0.69% to 11,657.05.