Benchmarks to get pessimistic start following weakness in Asian peers

Indian markets ended volatile session in green territory on Tuesday on fresh buying in energy, telecom, power and oil & gas stocks. Today, the start of session is likely to be pessimistic following weakness in Asian peers. There will be some cautiousness with ratings agency CARE Ratings’ report that the pace of employment growth in India slowed in the last two years with job creation growing 3.9% in 2017-18 and 2.8% in 2018-19. The ratings agency highlighted that core industries have witnessed virtually negative growth in headcount, with crude oil just about maintaining the employment level. However, traders may take note of report that the government categorically stated that it does not intend to revise its fiscal deficit target of 3.3 percent of gross domestic product (GDP) for the current financial year notwithstanding the slowdown in economic activities. Minister of State for Finance Anurag Thakur said expenditure of various ministries and departments of the government is as per the estimates approved by Parliament. Meanwhile, markets regulator SEBI has said trading and clearing members should compulsorily collect upfront certain margins from their clients in the cash segment. There will be some buzz in the reality stocks with a private report indicating that housing sales of nine major real estate companies, which are listed on stock exchanges, increased marginally 2 percent to Rs 5,520 crore during the second quarter of 2019-20. Telecom stocks will be in focus with report that the telecom regulator will wait for operators to report their new tariffs to the authority before taking a view on whether the revised pricing is within the regulatory framework. There will be some reaction in banking stocks with report that Finance Minister Nirmala Sitharaman told lawmakers that the country's state-run banks have reported frauds worth Rs 95,760 crore ($13.34 billion) in the first six months of FY20.

The US markets ended mostly lower on Tuesday on disappointing earnings results and doubts about a US-China trade deal. Asian markets are trading in red on Wednesday as the Sino-US trade talks produced nothing but a stream of conflicting messages.

Back home, Indian equity indices settled with notable gains on Tuesday. The start of the day was firm, aided with Union Minister Anurag Thakur’s statement that India is not facing 5 per cent economic slowdown and continues to be the fastest growing economy in the world. Thakur also said that a number of steps are being taken by the government to strengthen the economy that includes merger of banks and tax concessions to industries. The street remained optimistic, amid reports that India has the potential for very rapid economic growth over the next decade which will lift people out of poverty and allow the government to invest in health and education priorities in an exciting way. Despite some volatility during the session, bourses managed to keep their heads above water for the whole day, taking support with Finance Minister Nirmala Sitharaman’s statement that the government has implemented major reforms in the last five years to build the investment climate in the country for becoming a $5 trillion economy. Investors took a note of Finance Commission chairman NK Singh’s statement that the government must complete unfinished tax reforms to improve the woefully inadequate tax buoyancy witnessed in the past one-and-a-half years, while advocating that simple direct tax code should be implemented soon & that the GST Council ought to go to the drawing board to address compliance issues. Finally, the BSE Sensex rose 185.51 points or 0.46% to 40,469.70, while the CNX Nifty was up by 55.60 points or 0.47% to 11,940.10.