Benchmarks likely to make cautious start; macro-economic data eyed

Indian markets gained traction and ended higher on Thursday as possible interest rate cuts by the United States' Federal Reserve lifted sentiments across the Asian markets. Today, the markets are likely to make a cautious start ahead of macro-economic data and US-India trade talks beginning later in the day. Market-men will be eyeing on the macro economic data of industrial production for May and consumer price inflation for June to be released after the market hours. Besides, India and the US would meet on July 12 to discuss various trade and economic issues and strengthen bilateral relations. US President Donald Trump has been asking India to reduce customs duties on US products further. Investors will also looking for India's second largest software services firm Infosys’ results for April-June quarter to be out later in the day. There will be some cautiousness with former finance minister P Chidambaram’s statement that the Union Budget 2019-20 does not chalk out a clear roadmap to take India on the path of high economic growth and lacks bold steps and structural reforms. Meanwhile, a RBI showed that housing affordability has worsened in four years with Mumbai being the least affordable. However, some respite may come later in the day with report that as rainfall in the first 11 days of this month was 24% more than ‘normal’, the overall season’s rain deficit came down to 12%, from 33% witnessed in June. The report said continuance of the current spell of showers for another week may help the farmers to complete the kharif sowing operations which were down by 27% until last week from the year-ago level. Besides, the US India Strategic and Partnership Forum (USISPF) in its report said that the bilateral trade between India and the US could reach $238 billion by 2025 from the current $143 billion given the present dynamics of the commercial engagement. There will be some buzz in the non-banking financial companies (NBFCs) stocks with report that the Reserve Bank of India (RBI) cancelled licences of 1,701 NBFCs in the year-ended March 31 for failing to meet minimum capital requirements. There will be some reaction in textile stocks with the Cotton Association further lowering its crop estimate by 3 lakh bales to 312 lakh bales for the 2018-19 season, mainly due to poor rainfalls in the South. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended mostly higher on Thursday on improved bets of an interest rate cut following Fed chief Jerome Powell’s dovish remarks, while healthcare stocks were mixed after the Trump administration withdrew a rule that would kill rebates. Asian markets are trading mixed on Friday as data showed Singapore’s economy shrinking much more than expected in the second quarter.

Back home, Indian equity indices posted gains on Thursday’s trading session, with both Sensex and Nifty closing higher by 266 and 84 points, respectively. It was a good start to markets, aided by Commerce and Industry Minister Piyush Goyal’s statement that foreign direct investments (FDI) into the country grew 3 per cent to $6.95 billion in April. During 2018-19, the country recorded the highest-ever total FDI inflow of $64.38 billion, which was 6 per cent higher as compared to 2017-18.  Traders took encouragement with a report stating that India has the potential to become the world’s future investment hub and is expected to be the fastest-growing market for investment professionals over the next decade. Key indices extended their gaining rally in the second half of the session, on account of firm cues from global markets. Domestic sentiments got a boost with Finance Minister Nirmala Sitharaman’s statement the government is committed to continue the path of fiscal consolidation without compromising on public expenditure. Finance Minister also highlighted that promotion of economic growth will be on top of agenda. Market participants were also positive with CBDT Chairman Pramod Chandra Mody’s statement that the government has re-calibrated and fixed the direct taxes collection target for this financial year at Rs 13.35 trillion, a task that is difficult, but achievable. Finally, the BSE Sensex gained 266.07 points or 0.69% to 38,823.11, while the CNX Nifty was up by 84.00 points or 0.73% to 11,582.90.