Markets to make cautious start amid mixed global cues

Indian markets trimmed most of the losses and ended flat on Tuesday on the back of a recovery in large-cap stocks and ahead of first quarter earnings. Today, the start is likely to be cautious amid mixed cues from global markets coupled with higher crude oil prices. There will be some cautiousness with Moody’s Investors Service’s statement that weak growth prospects for India will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality. Traders will be concerned with Crisil in its earnings preview stating that India Inc will see the slowest quarterly revenue growth in two years, which will more than halve to 6 percent from 14-15 percent, due to a deceleration in consumption and lower realisations. It added that not just the topline, but corporate India is also staring at a sharp fall in profitability, with operating profit growth expected to come in at a low 3 percent as against an average of 13 percent in the past four quarters. However, some support may come later in the day with Vice-chairman of Niti Aayog Rajiv Kumar’s statement that the target of achieving an economy of $5 trillion within 2024-25 was eminently doable and the private sector would have to take the lead. He added that there are several initiatives mentioned in the budget which point out to the willingness of the government to work along with the private sector. There will be some buzz in the consumer durables stocks with a private report that the consumer durables industry in India will reach $36 billion by 2023 and a whopping $23 billion sales would be digitally influenced. There will be some reaction in power stocks with private report that imposition of auction ceiling prices and delays in commissioning of awarded projects have lowered near-term growth outlook of wind power sector in India. There will be some result reactions too, to keep the markets in action.

The US markets ended mostly higher on Tuesday as tech stocks boosted the sentiments, but worries about the effect on earnings of a protracted US-China trade dispute capped the gains. Asian markets are trading mixed on Wednesday as investors await Fed chairman Jerome Powell's testimony before Congress for further cues on Federal Reserve’s monetary policy.

Back home, paring almost all of their losses, key Indian equity benchmarks ended Tuesday’s trading session on flat note. After a weak start, markets remained lackluster, impacted by CARE Ratings’ report stating that economic slowdown has begun to dent the credit profile of India Inc. There has been a deterioration in the credit quality of entities rated in the first quarter of the current financial year, showing effect of the prevailing slowdown in the Indian economy. The street also got cautious with a private report that India’s decision to raise duties on gasoline and diesel is unlikely to threaten the inflation outlook, keeping alive expectations of more interest rate cuts from the central bank. But, in noon deals, key indices staged a sharp recovery to end near their neutral lines. Losses got trimmed, with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement the financial system is hugely surplus with liquidity and this would facilitate the better transmission of rate cuts implemented by the RBI. Market participants took some support with Minister of State for Finance, Anurag Singh Thakur’s statement that the government has infused over Rs 3.15 lakh crore into public sector banks (PSBs) in the 11 years through 2018-19 (FY09 to FY19). He also said as per RBI guidelines, banks in India are required to maintain a minimum capital to risk-weighted assets ratio (CRAR) of 9 per cent. Finally, the BSE Sensex gained 10.25 points or 0.03% to 38,730.82, while the CNX Nifty was down by 2.70 points or 0.02% to 11,555.90.