Benchmarks likely to make cautious start of new week

Indian markets ended lower on Friday with losses of around 0.75% each, mainly on the back of later hour sell-off led by decline in private sector lenders like IndusInd Bank, Axis Bank and Kotak Mahindra Bank. Today, the start of new week is likely to be cautious amid concerns over rising oil prices and delayed monsoon. India Meteorological Department stated that the overall monsoon deficiency in the country has reached 43 per cent due to its sluggish pace. It said the progress of monsoon was halted due to Cyclone Vayu. As its intensity decreases, they expect monsoon to progress in the next 2-3 days. Some cautiousness will come with report that the continuing of high crude and gold imports pushed India’s trade deficit to a six-month high of $15.36 billion in May. Besides, India's exports grew by 3.93 per cent to $30 billion in May on account of healthy growth in sectors such as chemicals, pharmaceuticals and engineering, while imports too rose by 4.31 per cent to $45.35 billion in May. Traders will also be reacting to report that India announced a hike in customs duties on as many as 28 US products, including almond, pulses and walnut, in response to higher tariffs imposed by Washington on Indian products like steel and aluminium. The move will hurt American exporters of these 28 items as they will have to pay higher duties, making those items costlier in the Indian market. Traders will also be concerned with ICRA’s report that housing finance growth is set to slow down to 13-15 percent this fiscal, lower than the average of the past three years, due to the lingering liquidity issues faced by non-banking lenders. It added that there can also be an adverse impact on the outstanding housing credit, which stood at Rs 19.1 lakh crore as of March 2019. There will be some buzz in the banking sector stocks with report that the Finance Ministry is evaluating capital needs of state-owned banks, and likely to provide about Rs 30,000 crore in the upcoming Budget to help them meet minimum regulatory capital requirement in the current fiscal.

The US markets ended marginally in red on Friday as tepid economic data and rising tensions in the Middle East added to concerns over growth and trade. Asian markets are trading mixed on Monday ahead of the monetary policy decision of the US Federal Reserve on June 19.

Back home, Indian equity benchmarks closed the last trading day of the week near their intraday low points, with Sensex and Nifty losing almost 300 and 100 points, respectively, on the back of heavy losses in Realty, Telecom and Banking stocks. The start of the day was weak, amid credit rating agency, ICRA’s latest 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. In the last leg of the trade, key indices extended theirs losses, tracking weak global markets. Market participants paid no heed towards a report that India’s Wholesale price index (WPI) inflation continued its easing trend for second straight month and hit 22-month low of 2.45% in the month of May 2019, the lowest level since July 2017, as prices of food articles cooled down. As per the data of Ministry of Commerce & Industry, WPI for All Commodities (Base: 2011-12=100) for the month of May, 2019 stood at 2.45% (provisional) as compared to 3.07% (provisional) for the previous month and 4.78% during the corresponding month of the previous year. Finally, the BSE Sensex declined 289.29 points or 0.73% to 39,452.07, while the CNX Nifty was down by 90.75 points or 0.76% to 11,823.30.