Benchmarks likely to open in green on Friday

The Indian markets before going for a holiday posted strong gains on Wednesday, on lower inflation and easing trade tensions. Markets remain closed on Thursday on account of Independence Day. Today, the start of the session is likely to be in green tracking Asian peers. Traders will be taking encouragement with government data showing that India’s merchandise exports rebounded and grew 2.25% in July, aided by higher shipments of organic goods, drugs and pharmaceuticals, while imports shrank, narrowing the trade deficit. The commerce department data showed that India’s exports increased to $26.3 billion in July from $25.75 billion a year earlier, imports declined 10.4% to $39.76 billion last month from $44.39 billion in July 2018. This resulted in the trade deficit narrowing to $13.43 billion from $18.63 billion a year earlier. Some support will also come with the India Meteorological Department (IMD) data showing that monsoon rains in India in the week through August 14 were above average for a third straight week, easing concerns of drought. Traders may take note that Prime Minister Narendra Modi took stock of the economy on Thursday, amid rising concerns over a slowdown, weak consumer confidence and steep loss of investor wealth from a decline in stock prices. Meanwhile, SBI study stated that the current economic slowdown can be attributed to a combination of structural and cyclical factors, in addition to global uncertainties. It added that the country's economy is showing signs of slowdown, with hi-frequency indicators like industrial output posting subdued growth and automobile sales touching historical lows. There will be some buzz in the banking stocks with Fitch’s report that the recent steps by the Reserve Bank to encourage banks to increase lending to non-banking finance companies and retail borrowers are likely to rise risks for the sector. Textile will be in focus with report that Indian textile and clothing industry players say one-third of their production capacity is lying idle due to sluggish exports, poor domestic demand, and growing imports from Bangladesh and Sri Lanka, and have sought immediate relief from the government. There will be some reaction in auto stocks with the auto industry body Society of Indian Automobile Manufacturers’ (SIAM) statement that even if it is for a short period of time, just to kick start the industry, there should be a reduction in goods and services tax (GST) from 28 percent to 18 percent.

The US markets ended mostly higher on Thursday as upbeat data on Americans’ spending habits helped to ease investors’ fears about a possible recession. Asian markets are trading mostly in green on Friday following gains on Wall Street.

Back home, after yesterday's heavy sell-off, Indian bourses rebounded on Wednesday to end on higher note. Key indices made a positive start of the day, as India’s retail inflation based on Consumer Price Index (CPI) eased to 3.15% in the month of July 2019, on the back of softening fuel and light prices, even as inflation in the overall food basket moved up. CPI was 3.18% in June 2019, while it stood at 4.17% in July 2018. Adding some comfort, Reserve Bank of India (RBI) said that bank credit to registered NBFCs (other than MFIs) for on-lending to agriculture, micro and small enterprises (MSEs) and housing sector up to prescribed limits will be classified as priority sector lending, in a bid to boost credit to the needy segment of borrowers. Markets gained traction in noon deals, after India’s Wholesale price index (WPI) inflation also fell to a multi-year low of 1.08% in the month of July, on account of cheaper fuel and food items. According to the latest data released by the government, WPI slowed down to 1.08% (provisional) in July, 2019 as compared to 2.02% (provisional) for the previous month and 5.27% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 1.08% compared to a build up rate of 3.1% in the corresponding period of the previous year. Traders were optimistic, as the commerce ministry laid out an online system for claiming benefits under Transport and Marketing Assistance (TMA) scheme, aimed at promoting exports of agri goods. Finally, the BSE Sensex gained 353.37 points or 0.96% to 37,311.53, while the CNX Nifty was up by 103.55 points or 0.95% to 11,029.40.