Markets likely to make negative start of new week

Indian markets ended range-bound trade at intraday high levels on Friday mainly on the back of late hour buying led by financial and IT stocks as hopes of another rate cut by RBI boosted investor sentiments. Today, the start of new week is likely to be negative following weakness in global markets along with surge in crude oil prices amid drone attacks in Saudi Aramco, the largest oil producer in the world. Some cautiousness will come as the commerce ministry’s data showed that India's exports dropped by 6.05 per cent to $26.13 billion in August compared to the year-ago month. Imports too declined by 13.45 per cent to $39.58 billion, narrowing trade deficit to $13.45 billion in August. Traders will be eyeing the inflation data based on wholesale price index (WPI) slated to be announced later in the day. Though, some support may come later in the day as finance minister Nirmala Sitharaman announced reforms to boost the export and housing sector in the country. She announced a slew of measures including a new attractive scheme to refund the duties and taxes on exports that will replace all existing schemes in a bid to stimulate exports and the economy. She said this will incentivise all exporters more than all the existing schemes put together. The revenue forgone is projected at upto Rs 50,000 crore. She also said there are clear signs of revival of industrial production and fixed investment after economic growth plunged to a six-year low. Traders may also took note of a report that foreign portfolio investors (FPIs) turned net buyers in the first half of September, pumping in Rs 1,841 crore into the capital markets, after remaining sellers for the previous two months. Meanwhile, the Reserve Bank of India’s data showed that the country's foreign exchange reserves increased by $1.004 billion to $429.608 billion in the week to September 6, helped by a rise in foreign currency assets. Banking stocks will be in focus as the Reserve Bank of India (RBI) proposed a minimum equity capital of Rs 200 crore to set up a small finance bank (SFB) under the on tap licence regime to expand the banking services through high technology-low cost operations. There will be some buzz in the power stocks with a private report indicating that the outstanding dues of distribution utilities from power producers have risen by more than 57 per cent to Rs 73,748 crore in July 2019 compared to the same month last year, showing stress in the sector.

The US markets ended mostly lower on Friday as the major averages encountered some resistance as they climbed back within striking distance of the record highs set in July. Asian markets are trading mixed on Monday, as oil prices surged following drone attacks over the weekend that hit major oil production facilities in Saudi Arabia.

Back home, Indian equity benchmarks ended the last trading day of the week with notable gains. After a cautious start of the day, key indices remained volatile for the most part of the day, impacted with the government data report showing that consumer price index-based inflation (CPI) for August crept up slightly to 3.21% year-on-year, compared with 3.15% in July, driven by a sharp rise in food prices. Market participants also remained worried with the International Monetary Fund’s (IMF) statement that India's economic growth is much weaker than expected, attributing the reasons for corporate and environmental regulatory uncertainty and lingering weaknesses in some non-bank financial companies. However, markets staged recovery in the last hours of trade, amid reports that the Reserve Bank of India is expected to go for a further rate cut in the next month's monetary policy review as inflation is expected to pan out in line with the central bank's projection. The street took some support with Commerce and Industry Minister Piyush Goyal’s statement that the government will soon come out with guidelines on extending foreign exchange credit to exporters at affordable rates. Besides, snapping two-month declining trend, India’s industrial production measured by Index of Industrial Production (IIP), which gauges production in the industrial sector for a given period of time, stood at 4.3% in July 2019. Finally, the BSE Sensex gained 280.71 points or 0.76% to 37,384.99, while the CNX Nifty was up by 93.10 points or 0.85% to 11,075.90.