Benchmarks likely to make pessimistic start amid weak global cues

Indian markets recouped early losses and ended volatile session in green territory on Friday amid reports that Finance Ministry and PMO held discussions over suggestions and submissions by foreign portfolio investors (FPIs) regarding the surcharge issue. Today, the start of new week is likely to be pessimistic amid continued selling by foreign investors coupled with weak global cues. Foreign investors have withdrawn a net amount of Rs 2,881 crore from the Indian capital markets in the first two sessions of August on account of domestic as well as global headwinds. According to latest depositories data, FPIs pulled out a net sum of Rs 2,632.58 crore from equities and Rs 248.52 crore from the debt segment during August 1-2, taking the cumulative net outflow to Rs 2,881.10 crore. Besides, investors will be eyeing Services PMI data for the month of July to be out later in the day and Index of Industrial Production (IIP) later in the week. However, some support may come later in the day with former RBI Governor Bimal Jalan’s statement that the current slowdown in the Indian economy is cyclical and growth will pick up in one or two years. Traders will also be looking ahead to be the Reserve Bank of India’s (RBI) monetary policy meeting starting later in the day. The RBI is expected to cut the policy rate by 25 basis points, for the fourth time in a row, to give a boost to the economy at a time when key indicators point towards a slowdown. Traders may take note of a private report that the country will need to grow by 9% every year for five years continuously and raise aggregate investment rate to 38% of GDP to achieve Prime Minister Narendra Modi’s target of turning India into a $5 trillion economy. There will be some buzz in the select banking stocks with report that the RBI has slapped penalties on nine commercial banks, including State bank of India, Punjab National Bank and Bank of Baroda, for a host of violations, including delay on the reporting of fraud in the account of Kingfisher Airlines in case of two lenders. There will be some reaction in housing finance companies stocks with report that the National Housing Board (NHB) has announced an additional liquidity infusion facility of Rs 10,000 crore for priority sector home loans for one year. This is only limited to affordable housing, which means loans up to Rs 35 lakh in metros and for non-metros limit is Rs 28 lakh. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended lower on Friday as concerns about the outlook for the global economy continued to weigh on investor sentiments. Asian markets are trading in red on Monday as investors fretted over President Donald Trump’s escalation of the US-China trade war.

Back home, Indian equity benchmarks staged recovery to end the Friday’s trading session in green terrain, with Sensex garnering around 100 points. After a negative start, the markets traded in red terrain for the most part of the session, as the World Bank’s report showed 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. However, in the last leg of the trade, key indices turned positive, amid a report that the gross Goods and Services Tax (GST) collections increased to Rs 1.02 lakh crore in the month of July 2019. The July mop-up was 5.8 per cent higher than the Rs 96,483 crore collected in the same month last year. In late noon deals, markets participants took support with the Reserve Bank of India’s (RBI) latest data report showed that bank credit rose by 12.01 percent to Rs 96.57 trillion, while deposits grew 10.59 percent to Rs 126.491 trillion in the fortnight ended on July 19. In the year ago fortnight, deposits were at Rs 114.371 trillion and advances stood at Rs 86.09 trillion. Adding some relief among traders, the India Meteorological Department said 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. Finally, the BSE Sensex gained 99.90 points or 0.27% to 37,118.22, while the CNX Nifty was up by 17.35 points or 0.16% to 10,997.35.