Markets to open slightly in red on penultimate session of F&O expiry

Indian markets snapped tow-day losing streak and ended higher with notable gains on Tuesday led by gains in Reliance Industries, HDFC, Axis Bank, ICICI Bank, HDFC Bank, ITC and State Bank of India. Today, the start is likely to be slightly in red following weak cues from global markets. There will be some cautiousness with former RBI deputy governor Rakesh Mohan’s statement that manufacturing growth is not consistent with India's overall economic growth figures. He added that the country cannot grow at 8 per cent without manufacturing sector recording 10 per cent growth. However, some support may come later in the day with Federation of Indian Export Organisations’ (FIEO) statement that the government's focus to improve logistics, ease of doing business and modern trade infrastructure will help exports to touch $1 trillion in the next three years. It added that India has huge potential to boost its exports of goods and services from the current $535 billion. Traders may take note of report that monsoon rains have covered most parts of cane, cotton, and soybean fields in western India and some parts of rice-sowing areas in central and northern India. Meanwhile, traders' body CAIT said that the government is expected to release a draft of national retail policy in the next 10 days for comments. There will be buzz in the banking stocks with Crisil’s report that higher recoveries and slowdown in fresh bad loans are likely to reduce banks non-performing loans (NPAs) to nearly 8 percent by March 2020. It added that public sector banks (PSBs), which account for over 80 percent of the NPAs in the system, should see their gross NPAs decline over 400 bps to close to 10.6 percent by March 2020 from a peak of 14.6 percent in March 2018. There will be some reaction in power stocks with the government’s statement that India plans to add 500 gigawatts (GW) of renewable energy to its electricity grid by 2030, in a bid to clean up air in its cities and increase the share of renewables in its electricity grid.

The US markets declined on Tuesday as investors weighed commentary from Federal Reserve officials and shares of technology companies slumped. Asian markets are trading mixed on Wednesday after US Federal Reserve Chairman Jerome Powell tempered expectations for a potential interest rate cut.

Back home, Indian equity benchmarks gained the lost ground to end Tuesday’s session near their day’s high points. Markets made a negative start of the day, 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. But, key indices staged strong recovery in noon deals, amid reports that the Ministry of Micro, Small and Medium Enterprises is striving to increase the number of micro and small industries in the country on a sustainable basis through implementation of various schemes and programmes. The Ministry provides better credit facility, technology up-gradation and skilling to boost the entire MSME eco-system. In the last leg of the trade, bourses traded at intraday high peaks, 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. The street took a note of Former Vice Chairman of NITI Aayog, Arvind Panagariya’s statement that India's economy needs to grow at 8-10 per cent annually if good jobs have to be provided to those joining the workforce, emphasising that an export-led growth is very critical for creation of good jobs in the country. Finally, the BSE Sensex gained 311.98 points or 0.80% to 39,434.94, while the CNX Nifty was up by 96.80 points or 0.83% to 11,796.45.