Benchmarks to open in green following Asian peers; IIP data eyed

Indian markets ended in red on Thursday after Moody's Investors Service slashed its 2019-20 GDP growth forecast for India to 5.8 percent from 6.2 percent earlier. Today, the markets are likely to make positive start following firm cues from Asian peers. Investors will be eyeing the data of India’s Index of Industrial Production (IIP) for August and Infosys Q2 earnings set to be release later in the day. Traders will be getting some encouragement with Union Finance Minister Nirmala Sitharaman’s statement that the government is giving sector-specific solutions to fight the slowdown in economic growth. Hinting at other measures like steps to improve exports, easing credit, making more money available by early repayments to vendors and front-loading of banks recapitalisation, Sitharaman said the government has been working on sector-specific measures. Market participants may take note with the Goods and Services Tax (GST) collections dropping sharply to a 19-month low in September, the government has constituted a committee of officers to suggest measures to augment collections, expand the tax base and check evasion. However, some cautiousness may come as India Ratings and Research pared India’s gross domestic product (GDP) forecast for 2019-20 to 6.1%, the second downgrade in two months. The agency had revised its GDP growth estimate to 6.7% from its earlier forecast of 7.3% in August. Also, investors may be concern with Crisil Research’s report that a sharp drop in demand across consumption segments pulled down corporate revenue, excluding that of banking, financial services, insurance and oil companies, by 3 per cent in the second quarter of FY20. As per the report, it’s first time in 14 quarters that revenues have declined. Meanwhile, markets regulator SEBI has come out with a detailed framework for issuance of depository receipts (DRs), a move that will provide Indian companies increased access to foreign funds. There will be some buzz in the jewellery stocks with the Gems and Jewellery Export Promotion Council’s (GJEPC) report that gems and jewellery exports have declined 7 per cent to $12.4 billion during April-August 2019-20 on account of slowdown in demand in major developed markets. Aviation stocks will be in focus with International Air Transport Association (IATA) data showing that India slipped to the fourth position in domestic air passenger traffic in August with passenger volume growing 3.7 percent in the month over the period year-ago, reflecting the deepening crisis in the economy spawned by slumping consumer demand.

The US markets settled in green territory on Thursday on hopes that top-level US-China trade talks would yield at least a partial deal, while a rise in Apple's shares lifted the technology sector. Asian markets are trading higher on Friday after US President Donald Trump said he would meet with China's top trade negotiator.

Back home, bears gripped Dalal Street on Thursday, with Sensex and Nifty ending the trading session lower by around 300 and 80 points, respectively. Markets made a negative start of the day, as International Monetary Fund (IMF) chief Kristalina Georgieva said that the largest emerging market economies like India are facing an even more pronounced effect of the global downturn. The street remained pessimistic with a private report that a workforce analysis of listed companies reveals that the job loss in public sector was one of the worst in the recent times. In contrast to an increase of 9.2 per cent headcount in private sector, the public sector saw a decline of 2.6 per cent in FY19. Key indices extended their losses in the second half of the session, after International rating agency Moody's Investors Service in its latest report cut India's gross domestic product (GDP) growth forecast to 5.8 per cent for the current fiscal year (FY20) from 6.8 per cent in FY19, but it expects GDP to pick up to 6.6 per cent in FY21 and around 7 per cent over the medium term. Adding more worries among market participants, the World Bank said that Asia Pacific economies are expected to slow this year due to uncertainty around US-China trade tensions and slowdowns in major global economies could further hurt the region's exports. Finally, the BSE Sensex lost 297.55 points or 0.78% to 37,880.40, while the CNX Nifty was down by 78.75 points or 0.70% to 11,234.55.