Markets likely to start marginally in green amid higher tax mop-up

Indian markets gave up early gains and settled in red territory on Friday on account of profit booking by investors amid weak cues from Asian peers. Today, the start of new week is likely to be malignly in green as tax mop-up crosses Rs 1 lakh crore for the third straight month. The Goods and Services Tax (GST) collection in May came in at Rs 1,00,289 crore, clocking a growth of about 7% compared with the mop-up of Rs 94,016 crore in the corresponding month last fiscal. Some support will also come with report that overseas investors pumped in a net amount of Rs 9,031 crore into the Indian capital markets in May on expectations of more business-friendly measures following the BJP's landslide victory in the general elections. Investors will be eyeing manufacturing PMI data to be out later in the day. Traders will also be keenly eyeing the Reserve Bank of India’s (RBI) second bi-monthly monetary policy statement for 2019-20 later in the week. There is expectation that the RBI may cut repo rate by 25 basis points. Besides, the fiscal deficit for 2018-19 came in at 3.39% of GDP, marginally lower than 3.4% projected in the revised estimates of the Budget, mainly due to lower expenditure and increase in non-tax revenue. However, there may be some cautiousness as the Central Statistics Office (CSO) data showed that economic growth slowed to a 5-year low of 5.8% in the fourth quarter of 2018-19, pushing India behind China, due to poor showing by agriculture and manufacturing sectors. For full year 2018-19, the economic growth is estimated at 6.8%, compared 7.2% in the previous year. Traders will also be concerned about a report that the growth of eight core infrastructure sectors slowed down to 2.6% in April, from 4.7% in the same month of pervious year, due to negative growth in crude oil, natural gas and fertiliser output. Besides, confirming unemployment rate projected in a pre-election leaked report, the government said joblessness in the country was 6.1% of total labour force during 2017-18, the highest in 45 years. There will be some buzz in the banking sector stocks with rating agency Fitch’s statement that the performance of India’s banking sector is likely to be below average for the next two years because it is struggling with poor asset quality and weak core capitalization. There will be some reaction in auto industry stocks reacting to their monthly sales numbers.

The US markets ended sharply lower on Friday as investors feared President Donald Trump’s surprise threat of tariffs on all Mexico imports, amid a worsening trade war with China. Asian markets are trading mixed on Monday amid increasing concerns over the state of global trade.

Back home, Indian equity markets failed to sustain initial rally on Friday, as Sensex and Nifty settled with notable losses of 117 and 23 points, respectively. The markets made a firm start of the day, aided by industry body FICCI's economic outlook survey showing that India's GDP is likely to grow 6.5 per cent in the fourth quarter ended March 2019. FICCI 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. Sentiments on the street were also positive with NITI Aayog Vice Chairman Rajiv Kumar’s statement that a slew of 'big-bang' economic reforms that should please foreign investors are likely to be pursued in the first 100 days of Indian Prime Minister Narendra Modi's second term. Kumar further said that the reforms will include changes in labour laws, privatisation moves, and creation of land banks for new industrial development. However, markets turned negative in afternoon deals to end lower, on the back of weak cues from global markets. Domestic sentiments got hit amid reports that the rupee witnessed high volatility in the forex market following the allocation of key portfolios in the newly elected government. Traders took a note of reports that 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. Investors also took a note of a report that US-based India-centric business advocacy and strategic group has sought establishing an India Trade Representative under the Prime Minister’s Office for all international trade negotiations to be handled by one office with a focused approach. Finally, the BSE Sensex lost 117.77 points or 0.30% to 39,714.20, while the CNX Nifty was down by 23.10 points or 0.19% to 11,922.80.