Markets likely to make slightly positive start

Indian markets ended lower with cut of over half a percent on Monday tracking weak global cues and unabated foreign fund outflows. Auto stocks took a hit amid report that the government proposed a hike in registration fees for old and new vehicles. Today, the markets are likely to make slightly positive start mirroring Asian peers. Some support will come with SBI Ecowrap report stating that India has benefited from the US-China trade war by exporting more items to China. Overall exports to the US grew 9.46 per cent to $52.4 billion in 2018-19, for China the growth was 25.6 per cent to $16.7 billion. Traders may take note of a report that Finance Minister Nirmala Sitharaman called for a significant reduction in the central bank's policy rates and said the government did not intend to review the budget proposal for overseas sovereign borrowings. The minister also said the increase in surcharge on foreign portfolio investments (FPI) was not intended to hurt investors. Besides, the commerce and industry ministry has floated a cabinet note for a new export incentives scheme that would be compliant with the World Trade Organization (WTO) norms. However, there may be some cautiousness with CARE Ratings report that India is staring at a rise in food inflation soon, as weak monsoon rainfall hits the country’s food output. It said the retail inflation in the food components for June 2019 has risen to 13-months high and weak progress going ahead could push food inflation higher. Meanwhile, the Securities and Exchange Board of India (SEBI) may ease norms for Foreign Portfolio Investors (FPIs) in line with recommendations from a government committee led by HR Khan. There will be some cautiousness in the banking sector stocks with Moody’s report that even as more and more crippled banks come out of the dud asset tunnel, the heightening growth slowdown and the lingering crisis at non-banking lenders pose fresh challenges to their asset quality. There will be some buzz in the Telecom stocks with Fitch’s statement that India’s reserve price of $70 million per MHz is expensive, and will force Vodafone Idea and Bharti Airtel to participate in 5G spectrum auctions in a limited way. There will be some reaction in metal stocks with the World Steel Association report that India's crude steel output rose by 4 per cent to 9.336 million tonne (MT) in June 2019 compared to8.976 MT produced in the year-ago month. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended mostly lower on Monday as Wall Street awaited a hotly anticipated rate decision by the Federal Reserve and a new round of US-China trade negotiations. Asian markets are trading mostly higher on Tuesday as investors prepared for an expected US interest rate cut this week.

Back home, key Indian equity benchmarks fell hard on Monday to settle the day in red terrain, with Sensex and Nifty losing around 200 and 100 points, respectively. Key indices started on cautious note, amid reports that overseas investors have pressed the exit button in July and pulled out a net Rs 3,758 crore from the Indian capital markets on account of multiple headwinds, including the super-rich tax announced in Budget 2019-20. Domestic sentiments remained downbeat, as the government admitted that doubling of farm income by 2022 was not possible with the current rate of growth in the agriculture sector and said it was trying to promote allied sectors to achieve the target. Markets remained lackluster throughout the trading session, impacted with a report stating that midway into earnings season, it is clear that India Inc.’s P&L account remains under pressure. Revenue growth is so sluggish that even a modest increase in costs has not helped companies protect their margins. Market participants overlooked reports stating that India's chief economic advisor to the Union finance minister Krishnamurthy Subramanian exuded confidence in the economy swelling to a $5-trillion giant by 2025, saying the high target is definitely achievable. Finally, the BSE Sensex fell 196.42 points or 0.52% to 37,686.37, while the CNX Nifty was down by 95.10 points or 0.84% to 11,189.20.