Markets to make cautious start on Friday

Indian markets ended lower on Thursday, with cut of over a per cent, as RBI lowered the economic growth forecast for the current fiscal to 7 per cent from 7.2 per cent forecasted earlier. Today, the markets are likely to make a cautious start despite positive global cues. There will be some cautiousness with the India Meteorological Department’s (IMD) statement that the arrival of the monsoon in the national capital is likely to be delayed by two-three days, though the city is expected to receive normal rainfall. It said normally, the monsoon reaches Delhi by June 29. Since there is a delay in its onset in the southern peninsula, the wind system is likely to take two-three days longer to reach northwest India. However, some support may come later in the day with report that a G-20 surveillance note expects India’s economy to grow 7.3% in 2019 and 7.5% in 2020. Traders may take note of the Reserve Bank of India (RBI) governor Shaktikanta Das’ statement that the RBI expects the government to continue to be broadly prudent on the fiscal side. He said the government has broadly maintained the fiscal deficit glide path and RBI expects it to remain broadly fiscally prudent going forward. There will be some buzz in the banking sector stocks with the RBI governor Shaktikanta Das’ statement that the RBI will issue a new set of guidelines for bad loan resolution, replacing the February 12 circular that was quashed by the Supreme Court, within the next three-four days. There will be some reaction in textile industry stocks with report that India, which is emerging as a global textile hub with huge potential, needs to develop man-made fibre to remain competitive in the global market and it aims to be a $350 billion industry by 2025. Also, there will be some buzz in the steel industry stocks with CARE Ratings’ report that India’s steel consumption is expected to grow by 5%-6% this year, on the back of government’s expenditure towards infrastructure and construction. It added that with NDA being voted back to power, the focus will continue to remain on infrastructure development.

The US markets ended higher on Thursday as investors speculated that the US and Mexico are getting closer to a resolution over immigration issues that would delay the tariffs threatened by President Donald Trump. Asian markets are trading mostly in green on Friday as investors waited for concrete signs of progress in the US-Mexican trade standoff.

Back home, Thursday was yet another bad day for Indian equity benchmarks, as both the larger peers, Sensex and Nifty closed with steep losses of over a percent, even though the Reserve Bank of India (RBI) cut repo rate by 25 basis points to lowest in nine years and changed policy stance to Accommodative from Neutral. After a cautious start, markets remained under the grip of bears, amid reports that India’s services sector growth eased further in the month of May, as disruptions arising from the elections in the earlier part of the month hampered growth of new work intakes. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 50.2 in May from 51 in April. However, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- was at 51.7 in May, unchanged from April. Key indices extended their losses in the second half of trading session to settle near their intraday low points, as the RBI lowered the economic growth forecast for the current fiscal to 7 per cent due to the slowdown in domestic activities and escalation in a global trade war. In the April monetary policy, the growth of Gross Domestic Product (GDP) for 2019-20 was projected at 7.2 per cent. Trading sentiments also remained lackluster with the India Meteorological Department’s (IMD) statement that the onset of monsoon is likely to be delayed by a week and it is now expected to arrive only by June 8. The normal onset date for monsoon over Kerala is June 1 which also marks the official commencement of the four-month-long rainfall season. Finally, the BSE Sensex slipped 553.82 points or 1.38% to 39,529.72, while the CNX Nifty was down by 177.90 points or 1.48% to 11,843.75.