Markets likely to make slightly negative start on Friday

Indian markets hit a fresh record high intraday and ended with marginal gains on Thursday on positive global cues, as well as, positive sentiment on D-Street. Today, the markets are likely to make flat-to-negative start amid weakness in global markets. Traders will be concerned with the government data showing that output of core infrastructure industries shrank by 5.2% in September 2019 as seven of eight sectors witnessed negative growth. The eight core sectors had expanded by 4.3% in September 2018. During the April-September period, the growth of core industries fell to 1.3% against 5.5% in the year-ago period. There will be some cautiousness with report that India’s fiscal deficit has widened in the first half of the current fiscal year. The fiscal deficit stood at Rs 6.52 lakh crore till September-end 2019, compared to Rs 5.95 lakh crore in the same period of the previous fiscal year. Low revenue collections have become a reason to worry about the fiscal deficit. Traders may take note of former Reserve Bank of India (RBI) governor Raghuram Rajan’s statement that India needs new generation of reforms for economic growth. He also talked about the need for cleaning up the banking system. Meanwhile, putting in place a stricter framework, Sebi has directed all listed banks to disclose any divergence in bad loan provisioning within 24 hours of receiving RBI’s risk assessment report, rather than waiting to publish the details in their annual financial statements. There will be some reaction in Non-banking financial companies (NBFCs) stocks as the finance ministry said public sector banks (PSBs) have extended support of Rs 2.56 lakh crore to NBFCs by way of credit and pooled buyout since September 2018 as part of efforts to provide much-needed liquidity to the sector. There will be some buzz in the infrastructure stocks with Icra’s report that waiver of earnest money deposit for highway projects in EPC mode comes as a relief for mid-sized highway players. The auto sector stocks will also be in action, reacting to their monthly sales numbers. There will be lots of earnings announcements too, to keep the markets in action.

The US markets ended lower on Thursday on skepticism about a US-China trade truce and weakening manufacturing data. Asian markets are trading mostly in red on Friday on fresh concerns over Sino-US trade prospects.

Back home, Indian equity bourses receded from fresh record highs to close marginally higher on Thursday. The start of the day was fabulous, aided by Economist Intelligence Unit’s report that India & China are projected to see accelerated economic growth in the fourth quarter of this year, bucking trends in the US & the European Union. It added that the real GDP growth of India in the December-ending quarter is expected to be the highest among G7 & BRICS nations. Traders also got comfort with a private report that Indian companies have ranked third in Asia's overall environmental sustainability out of eight markets studied, with an average score of 63.12, which is slightly exceeded the regional average of 62.34 points. In the last leg of the trading session, markets cut most of their gains, after credit rating agency, India Ratings and Research’s (Ind-Ra) analysis of data of Annual Survey of Industries (ASI) indicated slowdown in labour productivity growth in the Indian organized manufacturing sector, which grew at an average annual rate of 3.7% during FY16-FY18 (FY11-FY15: 7.4%, FY06-FY10: 10.3%, FY01-FY05: 9.6%), however, it fell to 2.6% and 2.9% in FY17 and FY18, respectively. But, key indices managed to settle above their respective neutral lines, as Commerce and Industry Minister Piyush Goyal assured that start-ups will never be harassed and that the government is taking steps to promote them. Finally, the BSE Sensex gained 77.18 points or 0.19% to 40,129.05, while the CNX Nifty was up by 33.35 points or 0.28% to 11,877.45.