Markets likely to make cautious start ahead of GDP data

Indian markets ended F&O expiry session at record closing high on Thursday, led by gains in IT and banking stocks. Today, the start is likely to be cautious ahead of fourth-quarter gross domestic product (GDP) data due to be released later in the day amid mixed global cues. The industry body FICCI's economic outlook survey showed that India's GDP is likely to grow 6.5 per cent in the fourth quarter ended March 2019. FICCI said survey has put forth an annual median GDP growth forecast for 2019-20 at 7.1 per cent and the projection for fiscal 2020-21 has been put at 7.2 per cent. Traders may take note of a report that India Inc has welcomed the new term and team of Prime Minister Narendra Modi and hoped that it would be able to give new impetus to the economy, which is facing slowdown in several sectors. Meanwhile, the Narendra Modi government is likely to present the full Union Budget 2019 by the first week of July with prime focus on farmers' issue, agriculture and employment. Moreover, the Reserve Bank of India (RBI) has announced calendar for issuance of Sovereign Gold Bonds for the first half of the current fiscal. The Sovereign Gold Bonds (SGB) will be issued every month from June 2019 to September 2019. There will be some buzz in the metal industry stocks with report that Japan and South Korea strengthened their grip on the Indian steel market in April, supplying nearly three-fifths of the total imports. The increasing inroads the foreign steelmakers are making will add to pressure on the Indian government to take protectionist measures to support local mills.

The US markets ended higher on Thursday, but gains were limited as investors remained nervous about the impact of the trade war with China even though the latest data showed economic growth was healthy in the first quarter. Asian markets are trading mixed on Friday as Chinese economic data came in below expectations. The official manufacturing Purchasing Managers’ Index (PMI) for May came in at 49.4.

Back home, gaining significant ground, Indian equity benchmarks resumed their record closing spree on Thursday, with Sensex and Nifty settling above their psychological levels of 39,800 and 11,900, respectively. Key indices made a positive start of the day, as the Department for Promotion of Industry and Internal Trade (DPIIT) proposed to formulate a national retail policy with an aim to support growth of domestic trade. The national retail policy will be formulated to support development of the sector that would benefit 65 million small traders. Adding comfort among market participants, the Reserve Bank of India (RBI) extended minimum holding period requirement for Non-banking financial companies (NBFCs) to raise funds via loan securitisation to help the sector overcome liquidity shortage. Further, rally continued on the streets, after investments in the domestic capital market through participatory notes, led by equity allocation, rose to Rs 81,220 crore at the end of April on hopes of favourable market conditions. Out of the total investments made till April-end, Rs 58,820 crore was invested in the equities segment, Rs 21,542 crore in debt and Rs 123 crore in derivatives market. Some support also came amid reports that the RBI constituted a task force on the development of secondary market for corporate loans. Task Force will review the existing state of the market for loan sale/transfer in India as well as the international experience in loan trading. Finally, the BSE Sensex rose 329.92 points or 0.84% to 39,831.97, while the CNX Nifty was up by 84.80 points or 0.71% to 11,945.90.