Benchmarks likely to make cautious start ahead of macro-economic data

Indian markets extended their northward journey for third straight session and ended higher on Tuesday on the back of strong buying in banking, metal and energy stocks amid positive global cues. Today, the markets are likely to make cautious start amid weak global cues and ahead of macro-economic data. Retail inflation and industrial production data for May and April, respectively, due to be released later in the day. There is expectation that retail inflation likely accelerated to a seven-month high in May on rising food prices. However, some respite may come later in the day with the Reserve Bank of India’s (RBI) statement that it will infuse Rs 15,000 crore into the financial system through bond purchases on June 13. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of (six) Government securities under OMOs through multi-security auction using the multiple price method. Traders may take note of a report that RBI’s new guidelines to deal with bad loans will provide lenders the headroom and flexibility for resolution of large ticket stressed asset cases under the Insolvency and Bankruptcy Code (IBC). Meanwhile, the Finance Ministry said that the new monthly GST return filing system will be rolled out from October. The rollout is three months behind the schedule. There will be some buzz in the Information Technology (IT) stocks with ICRA’s report that the Indian IT services sector is expected to register a growth of 6-8 per cent in US dollar terms during 2019-20. It added that Indian IT firms could also see higher wage bills and lower margins on account of increased onsite hiring as they tackle tighter visa scrutiny and reduction in H1-B visa approvals. There will be some reaction in metal stocks with report that the Steel Ministry has suggested its commerce counterpart to bring certain changes in norms used for imposing anti-dumping duties with a view to making them more effective for protecting domestic players from cheap imports.

The US markets ended marginally lower on Tuesday as investors wavered between fears of rising trade tensions and hopes that policy makers will bolster markets with fresh stimulus measures. Asian markets are trading mostly in red on Wednesday as US-China trade issue remained unresolved and ahead of key economic data from China.

Back home, Indian equity markets ended higher for third straight session on Tuesday, with Sensex and Nifty gaining 165 and 42 points respectively. After a firm start, markets witnessed volatility just for short duration and then staged recovery to remain positive throughout the day, amid reports that SEBI proposed an informant mechanism to blow the whistle on insider trading cases, wherein genuine whistleblowers could get monetary reward of Rs 1 crore as well as amnesty from regulatory action. Traders remained optimistic with the Micro, Small and Medium Enterprise (MSME) ministry’s additional secretary Ram Mohan Mishra’s statement that ministry is working on developing enterprise facilitation centres at block level across the country to make MSMEs more competitive and help them integrate with big enterprises. Market participants were seen taking encouragement with Crisil’s latest report which stated that the system-wide non-performing assets (NPAs) stock declined massively to 9.3 per cent in last fiscal year (FY19), after tripling to 11.5 per cent in the four fiscals till March 2018. The decline was much faster than the Reserve Bank of India's (RBI) estimate. However, key indices failed to hold day’s high points at the end of the session, after Arvind Subramanian, Narendra Modi government's former chief economic adviser, said that India's economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP. Finally, the BSE Sensex gained 165.94 points or 0.42% to 39,950.46, while the CNX Nifty was up by 42.90 points or 0.36% to 11,965.60.