Markets likely to make cautious start ahead of GDP data

Indian markets ended lackluster trade in red on Thursday, with cut of around a percent each, dragged by a sell-off in financial stocks, as August series derivatives expired amid tepid global cues. Today, the markets are likely to make a cautious start. Investors will be looking ahead to the April-June quarter (Q1FY20) Gross Domestic Product (GDP) numbers to be out later in the day. As per a private report, India's economy likely expanded at its weakest pace in more than five years in April-June, as consumer demand and private investment weakened at a time global trade frictions have dampened business sentiment. However, some respite may come later in the day as stating that consumption needs to be given a push, Union Finance Minister Nirmala Sitharaman said the Centre will announce two more big steps in the coming days to give momentum to industry. The government has decided to increase spending and has announced a slew of measures to arrest the sluggishness in the automobile market. There will be some buzz in the auto stocks with ICRA's report that passenger vehicle sales in India is likely to decline in the range of 4-7% this fiscal saying agricultural output, revival in economic and industrial growth would be critical for auto sector's growth despite recent government measures to rekindle demand. There will be some reaction in agriculture stocks with Crisil’s report that monsoon deficit in the crucial first one-and-half months of the Kharif-sowing season, coupled with excessive rains in August that inundated agricultural fields in several states, are likely to drag down production of foodgrain (rice, pulses and coarse cereals) this season by 3-5% from last year’s 141.71 million tonne. Banking stocks will be in focus with the RBI’s report that early recognition and resolution of stressed assets have helped banks contain their gross non- performing loans ratio at 9.1% in FY19 down from 11.2% a year before. It said fresh slippages have also come down and as a result, the system-level provision coverage ratio has jumped to 60.9% during the period.

The US markets settled higher on Thursday amid renewed hopes for progress in the trade dispute between the US and China. Asian markets are trading in green on Friday as China struck a hopeful tone on trade with the US but continued fears about a global growth slowdown, or even a recession, capped sharp rallies.

Back home, Thursday turned out to be yet another weak day for Indian equity markets, as investors remained on sidelines on the F&O expiry day. The start of the day was negative, amid a private report stating that the Indian economy likely expanded at its slowest pace in more than five years in the April-June quarter, driven by weak investment growth and sluggish demand. Domestic sentiments remained lackluster, as slamming decision of the RBI to transfer its excess reserve to the government, bankers' body All India Bank Employees Association (AIBEA) said the apex bank should not be an extension counter of the finance ministry and what is happening now is a matter of serious concern. Indian key indices remained under the grip of bears during the whole day, despite firm cues from global markets. Markets participants failed to take any sense of relief with the development that the Government relaxed conditions for single-brand retailers having foreign direct investment (FDI) for complying with the mandatory 30% local sourcing regulations by allowing them to adjust all of their purchases to meet this norm. Investors also ignored the Singaporean minister K Shanmugam’s statement that India can explore many opportunities with the Southeast Asian grouping Asean and deepen the trade engagements with the region further. Finally, the BSE Sensex lost 382.91 points or 1.02% to 37,068.93, while the CNX Nifty was down by 97.80 points or 0.89% to 10,948.30.