Markets likely to open marginally in red amid higher oil prices

Indian benchmarks ended choppy trading session almost flat on Thursday as lack of buying triggers kept trading sentiment at a low ebb amid mixed macro-economic data. Today, the markets are likely to make slightly negative start amid mixed cues from Asian peers on rising global geopolitical tensions and higher oil prices. Traders will be eyeing the inflation data based on wholesale price index (WPI) slated to be announced later in the day. There will be some cautiousness with ICRA’s research report stating that the earnings released by 642 companies in the Indian corporate sector revealed that the revenue growth in the fourth quarter (January-March) of FY18-19 hit a six-quarter low at 10 percent. It added that weak consumer sentiments and softening of commodity prices led to a fall in the revenue growth in the last quarter of FY19. However, some support may come later in the day with the Reserve Bank of India’s statement that it will infuse Rs 12,500 crore into the financial system through bond purchases on June 20. The decision has taken based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward. Traders may take note of report that markets watchdog SEBI came out with a strict disclosure framework for credit rating agencies wherein they will be required to provide the probability of default for various rated instruments. The regulator's move comes against the backdrop of rising instances of debt defaults and concerns over the role of credit rating agencies in assessing the possible risks. Credit rating agencies have also come under the scanner in the IL&FS case. There will be some reaction in telecom stocks with report that the apex decision making body at the Telecom Department has decided to refer to TRAI for reconsideration the recommendations on spectrum auction amid industry's concerns on pricing. The Digital Communications Commission (DCC) also approved the terms and conditions for 5G trials in the country. There will be some buzz in the insurance stocks with report that the annualised premium equivalent of private sector life insurers saw a 28 percent year-on-year growth in May.

The US markets ended in green on Thursday with petroleum-linked shares gaining after suspected attacks on a pair of tankers boosted oil prices. Asian markets are trading mixed on Friday as investors weighed a variety of factors, including suspected attacks on two oil tankers in the strategic Strait of Hormuz and lingering worries about trade conflict between the US and China.

Back home, Indian equity benchmarks staged recovery to end flat on Thursday, with Sensex and Nifty reclaiming their crucial psychological levels of 39,700 and 11,900, respectively. The markets made a negative start of the day, as India’s retail inflation based on Consumer Price Index (CPI) jumped to a seven-month high of 3.05% in May. As per the data, the jump in the CPI was mainly due to rise in prices of kitchen items like vegetables, meat and fish. Domestic sentiments remained lackluster throughout the day, amid reports that deal making through the private equity/venture capital routes saw a sharp 54 percent dip in May at a low $2.8 billion due to fewer large deals. There were 82 deals involving PE/VC investments of $2.8 billion in May. The dip comes amid data release of sagging GDP growth fuelled largely by a fall in consumption which has been the one of the favourite for investors as well. But, in the last leg of the trade, key indices pared most of their losses, tracking firm European markets. Trading sentiments got improved after India has been lauded by a high-level panel on digital cooperation launched by UN chief General Antonio Guterres for undertaking revolutionary digital initiatives to ensure economic inclusion for its 1.3 billion citizens. Traders took some support with a report that India’s industrial production measured by Index of Industrial Production (IIP) picked up space and accelerated to a six-month high of 3.4% in April mainly on account of improvement in mining and power generation. As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of April 2019 stood at 126.8. Finally, the BSE Sensex declined 15.45 points or 0.04% to 39,741.36, while the CNX Nifty was up by 7.85 points or 0.07% to 11,914.05.