Markets likely to make slightly positive start on Wednesday

Indian markets ended higher for second consecutive session on Tuesday, with gains of over one third of a percent, led by gains in oil and gas, IT and financial stocks. Today, the markets are likely to make slightly positive start amid sharp fall in crude oil prices and hopes that the government could announce measures in the fiscal Budget to ease liquidity situation and boost the slowing economy. Investors will be eyeing Services PMI data to be out later in the day. Some support will come with Finance Minister Nirmala Sitharaman’s statement that India still continues to be the fastest growing economy and demonetisation has had no effect on the Indian economy. Some support may also come with report that Minister of Commerce and Industry Piyush Goyal has called for establishing a framework to increase farm exports from Rs 2.75 lakh crore to about Rs 7 lakh crore by 2024-2025. Goyal said a cooperative sector export promotion forum will be established as an exchange platform for cooperatives to make farmers and agriculture-based industries self-reliant. Traders may take note of report that the apex NBFC body Finance Industry Development Council (FIDC) said they should be allowed to avail of refinance facility under the Mudra scheme and also setting up of a permanent refinance window at RBI similar to the one that National Housing Bank (NHB) offers them to help meet their liquidity needs. The liquidity crisis has seen a massive 19 percent points drop in disbursement by NBFCs in the fourth quarter of FY19. However, some cautiousness may come with the finance minister’s statement that India's state-owned banks had classified Rs 1.50 trillion ($21.76 billion) worth of loans as wilful defaults in 2018-19, with the biggest lender State Bank of India accounting for nearly a third. Meanwhile, the government may impose anti-dumping duty on imports of certain types of filament yarn from China, Korea, Taiwan and Thailand as the commerce ministry has started investigation into alleged dumping of the product following complaints from domestic players. There will be some buzz in the Information Technology (IT) stocks with Crisil’s report that scaling up and the need to build digital capabilities will lead to faster consolidation among the mid-tier information technology companies in India. Also, there will be some reaction in metal stocks with Icra’s report that the waiver of 2.5% duty on imports of iron ore lumps, fines and pellets can bring much relief to the domestic steel makers after March 2020, when merchant mines across the country are headed for expiry. There will be some buzz in the sugar stocks with a report that sugar prices are expected to remain stable or slightly higher at Rs 34-35 per kg in the coming months following the surplus situation even as the production is likely to fall during 2019-20.

The US markets ended higher on Tuesday but gains were kept in check after the US threatened a new wave of tariffs on European goods, dampening recent optimism surrounding the Washington-Beijing trade truce. Asian markets are trading mostly lower on Wednesday as global trade concerns weighed on investor sentiment.

Back home, Indian equity indices staged late recovery after early fall on Tuesday’s trading session, with Sensex and Nifty reclaiming their crucial levels of 39,800 and 11,900, respectively. After a cautious start, key indices entered into negative terrain, as the finance ministry said that Goods and Services Tax (GST) collection registered at Rs 99,939 crore in the month of June 2019. The growth was sluggish as compared to Rs 1,00,289 crore in May 2019. Adding more worries, the audit report of Comptroller and Auditor General of India (CAG) showed that total service tax arrears rose to Rs 1.66 lakh crore in 2017-18, up from Rs 1.18 lakh crore in the preceding financial year. But in the second half of the day, benchmarks erased all of their losses to end in positive terrain. Domestic sentiments got boost, after Finance Minister Nirmala Sitharaman said economic growth is high on the agenda of the Narendra Modi 2.0 government and various steps are being taken to accelerate the GDP. Traders took some support with reports that the growth of India's eight core sectors has improved to 5.1% in May 2019 against 4.1% in the same month last year, helped by rise in output in steel and electricity. According to data released by the ministry of Commerce and Industry, the combined Index of eight core industries stood at 138.7 in May 2019. Finally, the BSE Sensex gained 129.98 points or 0.33% to 39,816.48, while the CNX Nifty was up by 44.70 points or 0.38% to 11,910.30.