Benchmarks likely to make pessimistic start

Indian markets ended choppy session in red territory on Tuesday weighed down by selling pressure amid fresh concerns of global trade tensions. Today, the markets are likely to make a pessimistic start amid weakness in Asian peers. Investors will be eyeing Services PMI data to be out later in the day. Traders will be concerned with a private report that corporation tax collection contracted by 1% in April-November 2019 compared with the same period last year, amid a slowing economy, even as the impact of the corporation tax rate cuts, announced in September, is yet to reflect in the numbers. There will be some cautiousness with a private report stating that it reduced India’s GDP growth estimate to 5.3% from 6% amid a rash of similar actions, especially after the September quarter growth slowed to a 26-quarter low of 4.5%. However, some respite may come later in the day with Economic Affairs Secretary Atanu Chakraborty’s statement that global rating agency S&P has reaffirmed sovereign rating of India with a stable outlook.  S&P has reaffirmed sovereign rating of India at BBB- with a stable outlook and it said that India's economy continues to achieve impressive long-term growth rates despite a recent deceleration. Some support may also come with Finance Minister Nirmala Sitharaman’s statement that the government is open to further reforms aimed at making India a more attractive destination for investors. Traders may take note of a report that the GST Council is likely to discuss the revenue position in its upcoming meeting amid states demanding release of pending GST compensation. Meanwhile, the government has assured the Rajya Sabha that the merger of 10 public sector banks will not lead to any job losses and employees' interest will be protected. There will be some buzz in the telecom stocks with industry body COAI’s statement that telecom operators have proposed sector regulator Trai to fix a minimum price for mobile internet as no company on its own is in a position to decide on it due to fierce competition in the market. However, private telecom operators want call rates to continue to remain unregulated. Power stocks will be in focus with report that power generation in the country fell by over 12% to 98,887 million units (MU) during October 2019, mainly due to reduction in demand for agricultural activities and cooling requirements in commercial sector.

The US markets ended in red on Tuesday after President Trump suggested the trade war with China could continue well into next year. Asian markets are trading lower on Wednesday after US President Donald Trump said a trade deal with China might have to wait until after the 2020 presidential election, dashing market hopes for a quick preliminary agreement.

Back home, Indian equity bourses closed Tuesday’s trading session with losses. The markets made a negative start of the day, as ICRA said that India Inc delivered an expectedly weak performance during the second quarter of the current financial year, reeling under the impact of continued weakness in consumer sentiments and a general slowdown in the economy. Adding some worries, a private report stated that with the government trying to revive a stuttering economy, the GST mop-up for November is expected to provide some respite, but it added that an improvement in GST collections may not be a solution to all the worries of the government. Weak trade persisted during the whole day, after Fitch Ratings’ report showed that Indian banks need an additional $7 billion (Rs 50,000 crore) equity by 2020-21 to support loan growth and cover for bad loans, adding that a slowing economy could exacerbate asset-quality tension for a sector grappling with weak recoveries and ageing provisions. The street overlooked Finance Minister Nirmala Sitharaman’s statement that corporate tax reduction is aimed at attracting fresh investment and generating jobs, and said that ‘green shoots’ are already visible with several foreign as well as domestic firms showing interest to invest. Finally, the BSE Sensex lost 126.72 points or 0.31% to 40,675.45, while the CNX Nifty was down by 54.00 points or 0.45% to 11,994.20.