Benchmarks likely to make cautious start on Thursday

Indian markets ended lower for second straight day on Wednesday on the back of heavy selloff as investors remained risk-averse due to uncertainties over economic growth. Today, the markets are likely to make a cautious start. Traders will be concerned with Care Ratings’ report that the ongoing economic slowdown has started hurting corporates as well, with companies reporting a sharp decline in both revenue and profit growth numbers in the June quarter. India Inc's net sales growth for the June quarter slid to 4.6 per cent as against 13.5 per cent for the same period last year, while the net profit growth moderated to 6.6 per cent as compared to last year's 24.6 per cent. There will be some cautiousness with the central bank’s statement that weakening of domestic growth impulses prompted the Reserve Bank of India governor Shaktikanta Das to opt for an unconventional rate cut of 35 basis points to push economic activities early this month. However, some support may come later in the day with report that the government is planning to boost domestic production of chemicals and petrochemicals to cut down imports and make India a manufacturing hub for the sector. Traders may take note of report that public sector banks will embark on second round of two-day bottom-up ideation exercise beginning Thursday for further streamlining the banking sector to help the nation become a $5 trillion economy in five years. Meanwhile, the Securities and Exchange Board of India (SEBI) has eased the process for on-boarding overseas investors. The market regulator also introduced an ‘informant mechanism’ to gather better evidence and crack down on insider-trading cases. The SEBI board clarified on the debt-to-equity ratio companies need to maintain to be eligible for buybacks. There will be some buzz in the auto stocks with Road Transport Minister Nitin Gadkari's statement that the government has set no deadline to ban the production of petrol, diesel vehicles or for automobile manufacturers to switch to electric vehicles (EVs). There will be some reaction in reality stocks with a private report that investments in the real estate sector tripled to Rs 1.4 lakh crore during 2014-18, mainly backed by institutional investments. As per report, the realty sector witnessed investments to the tune of Rs 46,500 crore between 2009-2013 and Rs 1.4 trillion during 2014-18. Also, telecom stocks will be focus with Telecom Regulatory Authority of India (Trai) report showing that prices of mobile data have fallen drastically by about 95 percent to Rs 11.78 per gigabyte (GB) but cumulative revenue of telecom operators has risen by around 2.5 times to Rs 54,671 crore in the last five years.

The US markets rose on Wednesday following the release of minutes from the Federal Reserve’s July monetary policy meeting, as fresh optimism over consumer spending countered recent worries over economic growth. Asian markets are trading mostly higher on Thursday following the overnight gains on Wall Street.

Back home, Indian equity markets fell hard on Wednesday’s trading session, with Sensex & Nifty plunging by 267 and 98 points, respectively. After a cautious start, key indices traded lackluster throughout the day, amid a private report stating that India's economic growth is set to slow further in the April-June quarter of this year to 5.7 per cent amid contraction in consumption, weak investments and an under-performing service sector. Traders took a note of another report that in a bid to achieve the fiscal deficit target, the government has cut down on its capital expenditure by 80% in February and March. It said the government is contributing to the slowdown rather than uplifting the corporate sector. Markets extended their losses in the second half of the session to settle near day’s low points. The street overlooked the Retirement fund body, Employment Provident Fund Organisation’s (EPFO) latest ‘Provisional Estimate of Net Payroll’ data report showing that India created 12,23,675 new jobs in the month of June 2019 as against 8,56,870 in May 2019. Also, market participants paid no heed towards the Union Housing and Urban Affairs Minister Hardeep Singh Puri’s statement that the government is set to achieve its target of providing housing for all in 2020 itself, two years before its stated deadline of 2022. Finally, the BSE Sensex lost 267.64 points or 0.72% to 37,060.37, while the CNX Nifty was down by 98.30 points or 0.89% to 10,918.70.