Markets to get positive start on sanguine global cues

Indian markets ended volatile trade marginally higher on Tuesday led by gains in IT and oil marketing companies. Today, the start of session is likely to be in green tracking supportive global cues amid US-China trade optimism. Traders will be getting some encouragement with the Reserve Bank of India’s (RBI) statement that it will infuse Rs 12,500 crore of liquidity into the system through purchase of government bonds. 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 five government securities. Investors may take note of a private report that seven million jobs were formalised between 2015 and 2018 because of various measures, including GST, demonetisation, Skill India policies, fixed-term contract, maternity leave enhancement, among others. The report estimated job formalisation to the tune of 11 million between 2018 and 2021. Meanwhile, a top American Senator, from the opposition Democratic Party, has urged US Trade Representative Robert Lighthizer, to reinstate India into the Generalized System of Preference, which President Donald Trump has terminated. Besides, the RBI has set up an eight-member expert committee under the leadership of former chairman of Sebi UK Sinha to review the current framework for the MSME sector. The committee will suggest long-term solutions for the economic and financial sustainability of the micro, small and medium enterprises. There will be some reaction in power stocks with rating agency ICRA’s statement that wind energy generation capacity addition is likely to improve to 3.5-4.0 GW in FY2020, supported by the large project awards by the nodal agencies and measures being taken to address some of the key challenges, while land acquisition and transmission connectivity challenges will remain crucial. There will be also some reaction in fertilizer stocks with report that a policy for reimbursement of freight subsidy for transportation of fertilisers through the coastal shipping route has been approved.

The US markets surged on Tuesday as investors expressed optimism on a US-China trade deal after President Donald Trump said he will be meeting with his Chinese counterpart, Xi Jinping, at the upcoming G-20 summit. All Asian markets are trading higher in early deals on Wednesday following positive developments overnight on the US-China trade front.

Back home, snapping two-day losing streak, Indian equity benchmarks closed higher on Tuesday, with Sensex and Nifty reclaiming their crucial 39,000 and 11,650 levels, respectively. Markets made positive start tacking supportive global cues. Some support also came in 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. Later markets turned volatile as investors remained cautious ahead of US Federal Reserve's meeting, amid escalating global trade war concerns. Some cautiousness also came in as 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. Some concern came in as private report indicated that June may end up with a deficit, with monsoon remaining poor across the country so far. It added that there is a possibility of 40 per cent deficient monsoon in the month of June in 66 per cent districts across the country. However, late hour buying pushed the markets above neutral lines with recovery in European counter parts and on the back of buying in Oil & Gas, PSU and IT counters. Traders took 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. He said the conventional approach to the regulation and supervision of NBFCs had been ‘light-touch’, so that they could complement banks. However, to strengthen the sector, maintain stability and avoid regulatory arbitrage, RBI was taking necessary regulatory and supervisory steps, keeping in mind the requirements of the changing times. Finally, the BSE Sensex rose 85.55 points or 0.22% to 39,046.34, while the CNX Nifty was up by 19.35 points or 0.17% to 11,691.50.