Benchmarks to get optimistic start on positive global cues

Indian equity markets witnessed a volatile session on Wednesday but managed to end positive, lifted by financials, Telecom and metal stocks.  Today, the start is likely to be good on positive global cues and traders will be getting encouragement with report that foreign direct investment (FDI) equity inflows rose 28% in the first quarter of 2019-20 to $16.3 billion from $12.7 billion in the year-ago period. Singapore continued to be the top source of FDI at $5.3 billion, followed by Mauritius ($4.6 billion). There will also be some support on report that a top advisory body on external trade will meet next week to discuss issues related to export promotion, domestic manufacturing and competitiveness in the wake of a fall in exports of traditional, employment-generating sectors such as gems and jewellery, leather, handloom and cotton yarn and fabrics.  The commerce and industry minister chaired Board of Trade (BoT), which advises the government on foreign trade policy (FTP), will meet on September 12. It last met in June when it was merged with the Council of Trade Development and Promotion to streamline the consultation process with all stakeholders for promoting trade. However, there will be some cautiousness latter in the day on report that domestic rating agency Crisil has slashed its GDP forecast for FY20 to 6.3% from 6.9% earlier. The downward review comes days after GDP growth slowed down to a 25-quarter low of 5 percent in the June quarter which significantly is even lower than Pakistan's 5.4% growth and is due to the slump in private consumption and a near stalling of manufacturing activities. There will be some reaction in Automobile related stocks on report that Auto industry body Society of Indian Automobile Manufacturers (SIAM) said the industry, which has been reeling under a prolonged slump, is staring at a difficult road ahead for the rest of the year due to transition to BS-VI emission norm from BS-VI by April 2020. It said on an average each vehicle manufacturer is spending close to Rs 1,000 crore to upgrade all of their model line-up to meet the new emission norm within a short span. The banking stocks will keep buzzing on report that the Reserve Bank of India (RBI) has made it mandatory for banks to link all new floating-rate loans for housing, auto and MSMEs to external benchmark like repo from October 1, a move aimed at ensuring faster transmission of policy rate cuts to borrowers. There will also some buzz in travel and tourism stocks with World Economic Forum (WEF) in its latest report stating that India has moved up six places to rank 34th on world travel and tourism competitiveness index, driven by rich natural and cultural resources and strong price competitiveness. India's ranking improved from 40th to 34th, the greatest improvement over 2017 among the top 25 per cent of all countries ranked in the report.

The US markets ended higher on Wednesday following the release of the Federal Reserve's Beige Book, which said the US economy expanded at a modest pace through the end of August. Asian markets are trading in green in early deals on Thursday as apparent progress in the political crises in Britain and Hong Kong gave investor confidence a shot in the arm, with easing fears of a hard Brexit lifting the battered pound.

Back home, Indian equity benchmarks managed to settle in positive terrain on Wednesday’s highly volatile session. After a cautious start, indices altered between green & red terrain, amid Care Ratings’ report that the ongoing economic slowdown that India is witnessing may be because of weak investment growth. Two catalysts of investment - demand and availability of funds - have witnessed weak growth in the preceding months. Adding more worries on the street, India’s services sector activity expanded at a slower pace in the month of August, impacted by slower rise in new business inflows. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 52.4 in August from 53.8 in July.  However, markets staged recovery in second half of the session, on the back of firm cues from global markets. Traders took support with reports that India's central bank recommended a slew of measures for developing a secondary market for corporate loans, including easing of regulations to allow foreign portfolio investors (FPIs) to directly purchase distressed loans from banks. Further, market participants also got comfort, as SME Minister Nitin Gadkari has called a meeting of heads of banks, finance ministry officials, and CEOs of various of central PSUs on September 5 to sort out the problem of delayed payments being faced by small and medium enterprises. Finally, the BSE Sensex gained 161.83 points or 0.44% to 36,724.74, while the CNX Nifty was up by 46.75 points or 0.43% to 10,844.65.