Markets likely to open marginally in green on Tuesday

Indian markets extended losses for second straight session on Monday amid fears over India’s retaliatory tariffs on US goods, ongoing NBFC crisis and concerns over poor progress in monsoon. Today, the markets are likely to make slightly positive start following overnight gains on Wall Street. Traders will be taking some support with Niti Aayog CEO Amitabh Kant’s statement that circular economy has the potential to generate 1.4 crore jobs in next 5-7 years and create lakhs of new entrepreneurs. Some support may also come with a private report that capital investment in commercial real estate by Indian investors in overseas markets soared by 92 percent to $700 million between the first quarter of 2018 and the first quarter of this year. Traders may take note of Reserve Bank of India Governor Shaktikanta Das’ statement that the central bank will not hesitate to take any required measure to maintain the financial stability of the economy. However, there may be some cautiousness with report that Fitch lowered India's growth forecast to 6.6 per cent for the current fiscal from 6.8 per cent projected earlier, as manufacturing and agriculture sectors showed signs of slowing down over the past year. It said the Reserve Bank has cut interest rates by 0.25 per cent in its June meeting - the third cut so far this year- in the face of weak growth momentum and contained inflation. Meanwhile, the CBDT has issued a revised 32-page guideline for compounding of offences under direct tax laws, 2019 which will be executed under the I-T Act, 1961. There will be some buzz in the gem and jewellery stocks with report that CRISIL believes the withdrawal of benefits under the Generalized System of Preferences (GSP) effective June 5, as announced by the US earlier, will moderately hit gem and jewellery exports from India. The gems and jewellery sector is already under pressure on account of stringent lending rules and working-capital crunch.

The US markets ended higher on Monday ahead of central bank policy meetings around the world as investors continue to bet the Federal Reserve will slash interest rates this year. Asian markets are trading mostly in green on Tuesday ahead of the US Federal Reserve’s interest rate decision on June 19.

Back home, Dalal Street on Monday witnessed a bloodbath as both the larger peers, Sensex and Nifty, crashed by over a percent. The start of the day was negative, with India Meteorological Department’s statement that the overall monsoon deficiency in the country has reached 43 per cent due to its sluggish pace. Adding more anxiety among market participants, the data released by the Commerce Ministry showed that trade deficit, gap between imports and exports, widened to $15.36 billion during the month under review, as against the deficit of $14.62 billion in May 2018. But, India’s merchandise exports grew by 3.93 percent in May to $29.99 billion as compared to same period of last year, on the back of healthy growth in electronics and chemicals shipments. Weak trade continued on Dalal Street throughout the day, amid heavy selling in almost all the sectoral indices along with mixed cues from other Asian markets. Traders paid no heed towards rating agency ICRA’s report that though macro fundamentals of the Indian economy have taken an unfavourable turn in the past few quarters, the continuity of National Democratic Alliance (NDA) led by Prime Minister Narendra Modi after the general elections augers well for key sectors of the economy. The street also overlooked the Reserve Bank of India’s report showing that inching closer to its historic peak, India's forex kitty increased by $1.686 billion to $423.554 billion for the week to June 7. Finally, the BSE Sensex declined 491.28 points or 1.25% to 38,960.79, while the CNX Nifty was down by 151.15 points or 1.28% to 11,672.15