Benchmarks likely to make cautious start on Friday

Indian markets ended the June F&O expiry session almost flat, with negative bias, on Thursday, as gains in auto and realty sectors offset by losses in IT and metal space. Today, the markets are likely to make cautious start amid mixed cues from global markets. There will be some cautiousness with a report that India’s monsoon rains were below average for the fourth straight week, with rainfall scanty over central and western parts of the country in the week ended on June 26, raising concerns about major crop production and the impact on the nation's economy. However, some respite may come later in the day with the Reserve Bank of India’s (RBI’s) Financial Stability Report (FSR) stating that the financial system remains stable despite some dislocation of late. It said the proportion of commercial lenders' non-performing assets (NPAs) may fall slightly to 9% by March, but recommended that the vigil on non-banking finance companies (NBFCs) continues. Besides, Governor Shaktikanta Das called for more cooperation between the government and the RBI to help boost the sagging growth engine and to ensure systemic stability. Meanwhile, SEBI has approved a new framework for issuance of differential voting right (DVR) shares from July and banned mutual funds from entering into standstill agreements with any company. Besides, the government has decided to constitute a working group for the revision of the current series of Wholesale Price Index (Base 2011-12). The current series of WPI with 2011-12 as base year was introduced in May 2017. There will be some buzz in the cement stocks with ICRA’s report stating that owing to slower pace of project execution, the demand for cement has been tepid in the first quarter of the current fiscal. The agency, however, expects the demand to pick up from the third quarter of the fiscal, post-monsoon season and expects it to increase by nearly seven per cent during for FY2020. There will be some reaction in logistic stocks with Union Minister Piyush Goyal’s statement that Ministries of commerce, road, civil aviation and railways should work in coordination with an aim to cut the logistics cost to 9 per cent of GDP from the current 14 per cent. There will be some reaction in telecom stocks with Moody's Investors Service’s statement that the proposed spectrum auctions in India, which includes radiowaves for 5G technology, are likely to be held only in the second half of 2020 or later, given the stressed balance sheets of telecom operators.

The US markets ended mostly higher on Thursday ahead of US-China trade talks, but Boeing weighed on the Dow amid expectations that the 737 Max will remain out of service for longer. Asian markets are trading in red on Friday as investors await the kickoff of the G-20 summit in Osaka, Japan, where US President Donald Trump and Chinese President Xi Jinping are expected to meet amid the ongoing trade standoff.

Back home, last hour volatility pushed the Indian equity markets lower on Thursday, with Sensex and Nifty closing flat with a negative bias. After a positive start, key indices traded higher for the most part of session, aided by Arvind Panagariya’s statement that the escalating trade war between the US and China is an opportune time for India to attract the large multinationals looking for alternative locations outside the Communist country. Traders remained optimistic with the department for promotion of industry and internal trade's (DPIIT) Secretary Ramesh Abhishek’s statement that National Retail Policy will streamline the retail trade in India and is poised to provide the ease of doing business, which may be to the advantage of both traders and Indian economy. However, markets failed to hold gains in the last leg of trade and ended in red terrain, amid a report stating that the cumulative debt of the National Highway Authority of India (NHAI) has mounted to Rs 1.78 lakh crore in FY19 from around Rs 40,000 crore in FY14. The borrowing is expected to go up to Rs 3.31 lakh crore by FY23. Adding some more worries among market participants, Telecom Minister Ravi Shankar Prasad said that foreign direct investment (FDI) in the Indian telecom sector declined by around 43 percent to $2.6 billion in last financial year (FY19). The FDI equity inflow in the FY18 was $6,211.84 million whereas the FDI equity inflow in the FY19 was $2,667.91 million. Finally, the BSE Sensex fell 5.67 points or 0.01% to 39,586.41, while the CNX Nifty was down by 6.00 points or 0.05% to 11,841.55.