Indian markets extended their southward journey for fourth straight session and ended lower with cut of around half a percent on Thursday amid fresh trade concerns globally. Today, the markets are likely to make slightly positive start ahead of outcome of Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting to be announced later in the day. There are expectations that the RBI is likely to go for yet another rate cut, as inflation is within the comfort zone and the need to boost the economy is pressing. If the RBI announces a further rate cut of up to 25 bps, it will be the fifth in a row by the apex bank. Also, investors will be eyeing Services PMI data for the month of September to be out later in the day. Traders will be getting some encouragement with Niti Aayog CEO Amitabh Kant’s statement that there will be many more structural reforms by the government in the coming days to push economy to a high growth trajectory. He added that the government announced a series of economic boosters including capitalisation of public sector banks, merging some of them, package for exports, and bringing down corporate tax rate. Some support may also come with report that Commerce and Industry Minister Piyush Goyal and US Secretary for Commerce Wilbur Ross held discussions to increase bilateral trade between the countries. Besides, the US said that neither Indian nor American government stated that there will be a trade agreement in five minutes but it does not see any structural reason which might stop both the nations to have a trade agreement pretty quickly. There will be some buzz in the reality stocks with Crisil’s report that as many as 10 commercial real estate developers and operators have the potential to raise as much as Rs 1.5 lakh crore through the real estate investment trust (REIT) route by monetising 184 million sqft space. PSU stocks will be in focus with report that the government has decided to rely on cash-rich central public sector enterprises to rescue its strategic sale programme, with tepid interest coming from the private sector to take over controlling interest in some of sick and loss-making companies. There will be some reaction in insurance stocks with report that the Insurance Regulatory and Development Authority of India (Irdai) has set a working group to revisit the product structure of title insurance.
The US markets ended higher on Thursday after two sessions of dramatic losses as investors bet a string of disappointing economic data would spur the Federal Reserve to continue cutting interest rates. Asian markets are trading mixed on Friday as investors awaited the key monthly American employment report and subsequent comments due from Federal Reserve Chairman Jerome Powell.
Back home, bears held tight grip on Indian equity markets on Thursday, with Sensex and Nifty ending lower. The start of the day was negative, as the finance ministry in its latest data showed that Goods and services tax collection dropped to a 19-month low of Rs 91,916 crore in September 2019 witch was 2.67% lower than the collection in the corresponding month last year at Rs 94,442 crore and 6.4% below the last month’s figure of Rs 98,202 crore. Adding more worries, S&P Global Ratings slashed India’s Gross Domestic Product (GDP) growth projection to 6.3% for the current financial year (FY20) from 7.1% forecasted earlier, amid decline in private consumption. Weak trade persisted during whole trading day, on the back of weak cues from the global markets. Market participants remained pessimistic, amid a report stating that the Finance Ministry made it clear that companies opting for a lower tax of 22% will not be eligible for accumulated additional depreciation and Minimum Alternative Tax (MAT) credit. The street failed to take any sense of relief with Finance Minister Nirmala Sitharaman’s statement that the Insolvency and Bankruptcy Code has improved business climate in the country by making it easier for enterprises to exit in case of difficulties. Finally, the BSE Sensex fell 198.54 points or 0.52% to 38,106.87, while the CNX Nifty was down by 45.90 points or 0.40% to 11,314.00.
