Markets likely to make slightly positive start of new week

Indian markets ended choppy trading session in green territory on Friday amid narrowing trade deficit and expectations the government might soon provide a broad stimulus package to counter the economic slowdown. Today, the Sensex and Nifty are likely to make a slightly positive start of new week tracking firm global cues. Traders will be taking some support with Union finance minister Nirmala Sitharaman’s statement that her officials are in discussions with their counterparts in the PMO and once the talks are over, the government will figure out what remedial steps should be taken and announce the same. Some support will also come with the Reserve Bank of India’s (RBI) data showing that India's foreign exchange reserves surged by $1.620 billion to $430.572 billion in the week to August 9 on rise in foreign currency assets. Traders may take note of Fitch Solutions’ statement that the RBI is expected to cut interest rates by 40 basis points before the end of the current financial year as monetary easing till now appears to be insufficient in boosting economic growth. However, continued selling by FPIs may cap gains. Foreign investors pulled out Rs 8,319 crore on a net basis from capital markets in the first half of August. Some cautiousness may come as the Australia and New Zealand Banking Group (ANZ) slashed its forecast for India's economic growth to 6.2% in the financial year ending next March from a previous estimate of 6.5%, warning it would be tough for authorities to engineer a turnaround. Sugar stocks will be in focus as the World Trade Organization’s (WTO) dispute settlement body has agreed to set up panel requested by Brazil, Australia and Guatemala to review India's support measures for the sugar sector. There will be some buzz in the aviation stocks with report that aviation watchdog DGCA is looking at the option of introducing a new pilots training programme that will focus more on competitive assessment rather than just fixed flying hours. There will be some reaction in reality stocks with Fitch Ratings’ report that with non-bank financial companies (NBFCs) and housing finance companies becoming risk averse towards lending to real-estate sector, developers are likely to face a liquidity crisis. Meanwhile, Ujjivan Small Finance Bank has filed a draft prospectus for Rs 1,200 crore initial public offer with market regulator Securities and Exchange Board of India (SEBI).

The US markets ended in green on Friday as a rebound in bond yields eased fears of a recession that sent stocks tumbling earlier in the week. Asian markets are trading higher on Monday as hopes of more stimulus from central banks around the world and steps being taken by major economies such as Germany and China soothed investors’ fears of a sharp global economic slump.

Back home, Indian equity markets ended Friday’s session marginally higher. Indices made a negative start of the day, amid report that India Inc’s growth engine slowed in the June quarter amid sluggish demand across sectors and the base effect in the form of a strong expansion in the year-ago period, reflecting the overall slowdown in the economy. Sentiments remained lackluster with an another report stating that the current economic slowdown can be attributed to a combination of structural & 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 & automobile sales touching historical lows. But, in the noon deals, markets staged recovery to settle the day in green terrain, on account of firm cues from global markets. Traders got relief, as the Central Board of Direct Taxes (CBDT) brought in concept of Document Identification Number (DIN), taking further steps to ensure transparency in Tax Administration.  All communications made by the tax department to assessees from October 1, 2019 will carry a computer-generated DIN in order to promote transparency. Some support also came with the 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. Finally, the BSE Sensex gained 38.80 points or 0.10% to 37,350.33, while the CNX Nifty was up by 18.40 points or 0.17% to 11,047.80.