Benchmarks to make cautious start on Tuesday

Indian markets ended higher on Monday led by rally in IT stocks including Infosys, Tech Mahindra and TCS coupled with easing wholesale inflation. Today, the start of session is likely to be cautious amid mixed cues from Asian peers. There will be some cautiousness with report that India’s exports declined by 9.71 per cent to $25.01 billion in June 2019 compared to $27.7 billion in the same month last year due to a fall in shipments of gems and jewellery, engineering goods and petroleum products. Imports too declined by 9 per cent to $40.29 billion in June 2019 against $44.3 billion in June 2018 mainly due to falling prices of petroleum products. The trade deficit also lowered to $15.28 billion in June from $16.6 billion in June 2018. Traders will be concerned about the IHS Markit India Business Outlook indicating that business sentiment in India fell to its lowest level since June 2016, as companies were worried over a slowing economy, government policies and water shortage. It added that predictions of softer activity growth underpin the downward revisions of profit outlook, subdued hiring plans and relatively muted capital expenditure. However, some support may come later in the day with Finance Minister Nirmala Sitharaman’s statement that GST collection of states and union territories (UTs) increased to Rs 5.18 lakh crore in the full financial year 2018-19, up from Rs 2.91 lakh crore collected in nine months of 2017-18. Traders may took note of Commerce and Industry Minister Piyush Goyal’s statement that India is open to ideas from all sides to strengthen investors' confidence so that they can invest and participate in the country's development. Meanwhile, the government has ordered SFIO probe in six cases, including that of Jet Airways and its six entities, in the first three months of the current financial year. The Serious Fraud Investigation Office (SFIO), which probes white-collar crimes, comes under the corporate affairs ministry. There will be some reaction in power stocks with Fitch Ratings’ statement that a reduction of direct controlling stakes by the government of India in large state-owned energy companies is unlikely to negatively impact the ratings on these entities, as long as the government maintains majority effective ownership and broad control of their activities. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended marginally higher on Monday as investors digested second-quarter results from Citigroup, which reported a squeeze in interest margins, and awaited a wave of second-quarter earnings. Asian markets are trading mixed in early deals on Tuesday as investors looked to earnings and clues from policy makers for the next catalyst.

Back home, Indian equity benchmarks closed the Monday’s trading session on higher note. After a positive start of the day, key indices remained in green for the most part of the session, aided by Finance Minister Nirmala Sitharaman’s statement that the government has succeeded in keeping ‘complete control’ over retail inflation. The government has achieved success in not allowing inflation to raise its ‘dirty’ head to cause inconvenience to the consumers. Some comfort also came with the Reserve Bank’s report that the forex kitty continued to surge for the fourth successive week to scale a new lifetime high of $429.911 billion, after a heavy increase in the value of gold and currency assets during the week to July 5. However, volatility witnessed in the markets during the day, as India’s industrial production measured by Index of Industrial Production (IIP), which gauges production in the industrial sector for a given period of time, slipped to 3.1% in May 2019, as compared to 3.8% growth in May 2018. But, reports of easing WPI inflation helped the indices to end in green terrain. India’s Wholesale price index (WPI) inflation eased further for the third straight month in the month of June, driven down by decline in prices of fuel. According to the latest data released by the government, WPI slowed down to 2.02% in June from 2.45% in May and 5.68% during the corresponding month of the previous year. Finally, the BSE Sensex gained 160.48 points or 0.41% to 38,896.71, while the CNX Nifty was up by 35.85 points or 0.31% to 11,588.35.