Benchmarks to make weak start following lackluster trade in Asian peers

Indian markets settled in red territory for second straight session on Monday, with marginal cut, amid weak global cues and rise in oil prices. Today, the markets are likely to make a weak start following lackluster trade in Asian peers. There will be some cautiousness with a report that unaccounted wealth outside the country held by Indians was estimated in the range of $216.48 billion to $490 billion over various periods between 1980 and 2010. As per the report, the sectors where unaccounted income is found to be the highest included real estate, mining, pharmaceuticals, pan masala, gutkha, tobacco, bullion, commodity, film, and education. However, some support may come later in the day with the India Meteorological Department’s (IMD) statement that India's annual monsoon rains have covered nearly half of the country and conditions are favourable for further advancement into the central and western parts this week. It added that the monsoon's progress will help farmers to accelerate sowing of summer-sown crops, which has been lagging due to a delay in the arrival of monsoon rains. Traders may take note of Union Minister for Micro, Small and Medium Enterprises Nitin Gadkari’s statement that Micro, Small and Medium Enterprises MSMEs generated 5.87 lakh employment in 2017-18. Meanwhile, capital markets regulator SEBI plans to tighten its norms for encumbrance disclosure by promoters of listed firms, amid growing number of cases of shares seeing a free fall due to post-default distress sale of pledged securities by lenders. There will be some reaction in telecom stocks with Crisil’s report that greater spread of optical fibre is necessary before 5G becomes a reality and the already stretched telcos will have to invest at least Rs 1 lakh crore in laying fibre networks in the next three years.

The US markets ended mostly lower on Monday as a dearth of economic data kept trading activity relatively subdued. Asian markets are trading mostly in red on Tuesday as investors looked toward a meeting between US President Donald Trump and Chinese President Xi Jinping set to happen later in the week.

Back home, Indian equity bourses witnessed volatility on Monday, with Sensex and Nifty closing lower by 71.53 and 24.45 points, respectively. The start of day was cautious, amid Finance Ministry’s report showing that government's total liabilities reached Rs 84.68 lakh crore at the end of March 2019, up 1.5 per cent over the preceding quarter. The total liabilities stood at Rs 83.40 lakh crore at end-December 2018. The street were also cautious, as the Federation of Indian Chamber of Commerce and Industry (FICCI) in its quarterly survey found that sentiment in the manufacturing sector remains subdued as the proportion of respondents reporting higher output growth during Q1 (April-June) of 2019-20 has dropped to 41 percent as against 54 percent  in January-March (Q4) of 2018-19. Key indices staged recovery during noon deals but failed to sustain it and ended the session in red terrain, on the back of mix cues from global markets. Market participants overlooked a report stating that investments in the Indian capital market through participatory notes increased by nearly Rs 1,400 crore to Rs 82,619 crore till May-end, a gain of 1.72 percent over the previous month. The street also paid no heed towards Niti Aayog’s statement that expert panel for macroeconomics and employment came out with suggestions to achieve $5 trillion economy target during an interaction with Prime Minister Narendra Modi. Improvement of governance in PSU banks, enhancing growth rate of exports & employment generation were some of the key areas identified. Finally, the BSE Sensex lost 71.53 points or 0.18% to 39,122.96, while the CNX Nifty was down by 24.45 points or 0.21% to 11,699.65.