Benchmarks to open marginally in red on Friday

Indian markets extended southward journey for sixth straight session and ended marginally lower on Thursday, after a highly volatile session, as July derivative contracts expired. Today, the markets are likely to open marginally in red tracking weakness in Asian peers. Some cautiousness will come with private report that despite heavy buying by foreign investors in the last month of 2018-19 (FY19), foreign portfolio investors remained net sellers of $5.5 billion in the market. An announcement of increase in surcharge on the super-rich in the Union Budget FY20 has weighed on portfolio investors and witnessed outflows, especially in the equity segment. However, traders may take some support later in the day with Niti Aayog CEO Amitabh Kant’s statement that India was pursuing a policy of import substitution so far, and in future, the country's policy will essentially focus on export-led growth. He said India has huge potential to become a global manufacturing hub for electronics products. Also, some support may come with the Employees' State Insurance Corporation (ESIC) payroll data showing that around 12.66 lakh jobs were created in May, a tad higher than 11.15 lakh jobs in April this year. Traders may take note of rating agency Crisil’s report that the Reserve Bank of India’s (RBI) Guidelines on loan system for delivery of bank credit will lead to a better assessment of working capital requirements by borrowers, and improve financial discipline among them. Meanwhile, the meeting of the GST Council scheduled on Thursday, to decide on cutting tax rates on electric vehicles, has been postponed to July 27, 2019. Besides, industry body Assocham has sought inclusion of petroleum products in GST and subsuming of some local and state taxes like stamp duty. There will be some buzz in the non-banking finance companies (NBFCs) stocks with rating agency Fitch’s report that the government measures to provide partial credit guarantee to public sector bank on their asset purchases from NBFCs can ease funding pressure only for the short-term. There will be some reaction in sugar stocks with rating agency ICRA's statement that the Government’s decision to create a sugar buffer stock of four million tonnes for a year would not only help industry financially, but also improve the demand-supply situation in the domestic market. There will be some earnings announcements too to keep the markets buzzing.

The US markets declined on Thursday amid investors worried that the Federal Reserve will not be as dovish as expected in its monetary policy announcement next week following strong economic data and remarks from the top European Central Bank official. Asian markets are trading in red on Friday following overnight losses on Wall Street.

Back home, Indian equity bourses failed to hold gains on Thursday and ended trading session lower for sixth straight day. Key indices started the day on firm note, as India improved its ranking on the global innovation index (GII) by five places to stand at 52nd in 2019 from 57th position last year and maintained its position as the top exporter of IT services. Traders were optimistic during morning deals, with Revenue Secretary Ajay Bhushan Pandey’s statement that the revised direct tax target of Rs 13.35 lakh crore is realistic and achievable with the help of economic growth and exchange of data amongst various agencies and wings of the government. However, markets erased gains to turn volatile in afternoon deals, as India Meteorological Department said that monsoon rains were 35% below average in the week ending on July 24, with little rainfall over the central, western and northern parts of the country. But, downside remained restricted, amid a private report that recruiters are bullish about adding staff to their payrolls in the next six months of this year, and the maximum hiring is expected to be in the experience band of three-five years. Besides, the Government has introduced the Insolvency and Bankruptcy Code (Amendment) Bill 2019, that seeks to ensure timely completion of debt resolution process and provide more clarity on rights of stakeholders. Finally, the BSE Sensex lost 16.67 points or 0.04% to 37,830.98, while the CNX Nifty was down by 19.15 points or 0.17% to 11,252.15.