Benchmarks to make gap-down opening on weak global cues

Indian markets witnessed bloodbath on Thursday following weak core sector data which fell to its lowest in more than four years in June 2019. Today, the markets are likely to make a gap-down opening tracking weakness in global markets amid escalating trade tensions. Traders will be concerned with the World Bank report showing that India has now taken a backseat to be the seventh largest economy globally with UK and France now ahead of it. As per the data, India grew to $2.73 trillion economy in 2018. In 2017, the country stood at the fifth spot with its size at $2.65 trillion. There will be some cautiousness as gross Goods and Services Tax (GST) collections stood at Rs 1.02 lakh crore in July, marginally up from Rs 99,939 crore in June. However, some support may come later in the day with the India Meteorological Department’s statement that monsoon is expected to be normal in August and September. Quantitatively, the rainfall across the country as a whole during the two-month period is likely to be 100 per cent of the Long Period Average (LPA) with a model error of plus or minus 8 per cent. Some support may also come with S&P Global Ratings’ report that India is a relatively closed economy and is less reliant on manufacturing for growth which explains why it continues to perform well. It is currently on a soft path but it will outperform in relative terms. Meanwhile, markets regulator SEBI has directed depositories to freeze securities of promoters and directors of listed companies that failed to ensure updation of the database with a distinctive number of equity shares. There will be some buzz in the banking stocks with report that Finance Minister Nirmala Sitharaman will meet the CEOs of public sector banks on Friday to review the financial performance of the lenders and discuss ways to increase credit growth to propel the economy. Besides, the Reserve Bank of India’s (RBI) data showed that bank credit and deposits rose by 12.01 percent and 10.59 percent to Rs 96.57 trillion and Rs 126.491 trillion respectively for the fortnight to July 19. Auto stocks will be in focus with Crisil Research’s report that the passenger vehicles (PVs) sales is expected to face further pressure in the current month due to OEMs bid to maintain normal inventory levels amid weak retail sentiments. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended lower on Thursday, erasing a big surge from earlier in the day, after President Donald Trump said the US would impose an additional 10% tariff on Chinese imports to the US. Asian markets are trading in red on Friday following overnight fall on Wall Street amid escalated trade tensions between Washington and Beijing.

Back home, Indian equity bourses saw deep cut on Thursday, with Sensex and Nifty closing lower by losses of over a percent. Markets made a sluggish start of the day, after the government data showed that the growth of eight core infrastructure industries fell to its lowest in more than four years in June 2019. The index of eight core industries rose 0.2% in June, down from 7.8% in same month last year, mainly due to a contraction in oil-related sectors as well as in cement production. Adding more worries among traders, the Controller General of Accounts (CGA) in its latest data showed that the government's fiscal deficit or the gap between the government's expenditure and revenue touched 61.4% of the Budget Estimate (BE) in the first quarter (April-June) of fiscal year 2019-20 (FY20). Key indices remained under pressure throughout the day, as Global analytical firm CRISIL sliced its estimate of India's gross domestic product (GDP) growth by 20 basis points to 6.9 per cent for the current fiscal 2019-20 following a triangulation of downside risks: weak monsoon, slowing global growth and sluggish high-frequency data for the first quarter. The street paid no heed towards a report stating that India's manufacturing activity strengthened in the month of July, on the back of quicker upturn in factory orders. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 52.5 in July from 52.1 in June. Finally, the BSE Sensex fell 462.80 points or 1.23% to 37,018.32, while the CNX Nifty was down by 138.00 points or 1.24% to 10,980.00.