Markets likely to make pessimistic start of new week

Indian markets snapped four-day gaining streak and ended lower on Friday mainly on the back of late hour selloff as Budget proposals failed to cheer investors sentiment. Today, the start of new week is likely to be pessimistic mirroring weakness in Asian peers. Traders will be eyeing on the release of India’s industrial production (IIP) and Consumer price index (CPI) data for the month of May and June respectively, on June 12. With the start of the first quarter earnings season market participants will be watching some important results to be released later in the week. IT bellwethers TCS and Infosys will report their quarterly numbers on July 9 and July 12, respectively. There will be some cautiousness with report that foreign institutional investors (FIIs) sold shares worth Rs 89 crore on a net basis in the cash market, while domestic institutional investors (DIIs) bought shares worth Rs 276 crore. Also, Moody's said there are risks of India missing 3.3 percent fiscal deficit target for the current financial year if tax revenue falls short of the projection. The Budget 2019-20 lowered fiscal deficit projection for the current financial year to 3.3 percent from 3.4 percent targeted in the Interim Budget 2019-20 in February. Meanwhile, Cabinet Secretary P.K. Sinha has called meeting to discuss $5 trillion economy vision. Sinha has asked various departments of Finance Minsitry for a meeting to discuss the vision, policy intervention, investment and departmental responsibilities towards achieving the target of a $5 trillion economy by 2025. The vision to create India, a $5 trillion economy was announced by Finance Minister Nirmala Sitharaman during her Union Budget 2019 spech on Friday. There will be some buzz in the non-banking finance companies (NBFCs) with report that quickly acting on a Budget proposal to offer credit guarantee to higher-rated asset pools of financially sound non-banking finance companies, the Reserve Bank on Friday allowed banks to offer additional liquidity against their excess G-secs holdings, with immediate effect. The move will release an additional liquidity worth Rs 1.34 trillion to banks, which can be used for on-lending to shadow banking companies.

The US markets ended marginally in red on Friday following an unexpectedly strong US payrolls report that led investors to reassess how dovish a stance the Federal Reserve may take at its next meeting. Asian markets are trading lower on Monday after a strong jobs report last Friday stateside moderated expectations that the US Federal Reserve could soon be making a move on interest rates.

Back home, Union Budget failed to cheer Indian equity benchmarks on Friday, with both the larger peers, Sensex and Nifty, closing lower by 395 and 135 points, respectively. Markets made a positive start of the day, aided by Former Finance Minister Arun Jaitley’s statement that Indian economic growth graph was on an upward trajectory after past policy uncertainties have been replaced by certainties. Some support also came with reports that Ministry of Commerce and Industry has started an exercise to review the current Foreign Trade Policy 2015-20, in order to boost exports & domestic manufacturing and to reduce trade deficit. However, in noon deals, markets turned negative to end in red terrain, after announcement of Union Budget. Domestic sentiments got hampered after Moody's said there are risks of India missing 3.3 per cent fiscal deficit target for the current financial year if tax revenue falls short of projection. The Budget 2019-20 lowered fiscal deficit projection for the current financial year to 3.3 per cent from 3.4 per cent targeted in the Interim Budget 2019-20 in February. The street remained pessimistic, as the US dragged India to the WTO by filing a complaint against New Delhi's move to increase customs duties on 28 American goods, alleging the decision is inconsistent with the global trade norms. Finally, the BSE Sensex lost 394.67 points or 0.99% to 39,513.39, while the CNX Nifty was down by 135.60 points or 1.14% to 11,811.15.