Benchmarks to make positive start following Asian peers

Indian markets ended on firm note on Monday, with Sensex and Nifty settling above 37,100 and 11,000 levels, respectively, led by gains in financial stocks. Markets were closed on Tuesday on account of Muharram. Today, the start of session is likely to be in green following positive cues from Asian peers. Traders will be taking some encouragement with Finance Minister Nirmala Sitharaman’s statement that the government is not underestimating the slow Gross Domestic Product (GDP) growth and has full focus on how it can rise in the next quarter. She said the up and down are part of the growth process and the government is responding to the current economic challenges to revive demand and consumption in the country. Some support will also come as the Export-Import Bank of India (Exim Bank) forecasted that India’s merchandise exports to increase from $81.4 billion to $82 billion, with an expected growth rate of 0.6 per cent from a year ago during the second quarter of 2019-20 (July-September). Though, there may be some cautiousness as Fitch Ratings forecasted India's economic growth at 6.6 percent during the current year, down from 6.8 percent in the previous year, and said the government has only limited room to ease fiscal policy because of high debt. It said GDP growth is likely to rebound to 7.1 percent next year. Banking stocks will be in focus with Moody's Investors Service’s statement that the Reserve Bank of India (RBI) mandating banks to link certain loans to the external benchmark-based interest rate from October 1 is credit negative to the lenders as it will limit their flexibility in managing risks. There will be some reaction in the non-banking finance companies (NBFCs) stocks as India Ratings revised its outlook for the NBFCs to negative from stable. There will be some buzz in the agriculture stocks with the Agricultural and Processed Food Products Export Development Authority’s (APEDA) report showing that the country's agriculture exports dipped 14.39 per cent to $5.45 billion (about Rs 38,700 crore) in April-July this fiscal.

The US markets ended mostly in green on Tuesday with a rally in energy and industrial shares countering a drop in the technology and real estate sectors. Asian markets are trading mostly higher on Wednesday as hopes of diminishing US-China tensions and reduced risk of no-deal Brexit prompted investors to take profit in risk-off trade ahead of key central bank policy meetings.

Back home, Indian equity bourses maintained their gains to end Monday’s session in green terrain for the second consecutive day, with Sensex and Nifty gaining over 150 & 50 points, respectively. The markets made a negative start of the day, amid the Reserve Bank of India’s (RBI) data report showing that the country's foreign exchange reserves fell by $446 million to $428.604 billion in the week to August 30, mainly on account of a drop in foreign currency assets. But, soon indices turned positive, as Environment and forest minister Prakash Javadekar termed the present economic slowdown as a ‘cyclical process’. He said the government remains optimistic about near-doubling the economy size to $5 trillion by 2024. Firm trade persisted over the Dalal Street in the second half of the session, on the back of firm cues from global markets. Some support also came with a private report stating that the government has taken upon itself the task of giving the much-needed boost to the economy, by fast-tracking public spending, particularly CAPEX. Though, some gains got trimmed in the last hour of the trade, after credit rating agency, India Ratings and Research (Ind-Ra) revised its sector outlook on non-banking finance companies (NBFCs) to negative from stable. Besides, the agency maintained its negative outlook on large ticket housing finance companies (HFCs). Finally, the BSE Sensex gained 163.68 points or 0.44% to 37,145.45, while the CNX Nifty was up by 56.85 points or 0.52% to 11,003.05.