Benchmarks to make gap-down opening amid jump in oil prices

Indian markets ended higher on Tuesday with gains around half a percent each as no fresh aggressive moves from the US and Iran helped crude prices ease. Today, the benchmarks are likely to make gap-down opening tracking sell-off in Asian peers amid jump in oil prices. Traders will be concerned with the first advance estimates released by the Central Statistics Ministry showing that the government has estimated India's GDP growth during fiscal 2019-20 at 5% as compared to 6.8% in the year-ago period. The decline has been mainly on account of deceleration in manufacturing sector growth, which is expected to come down to 2% in 2019-20 from 6.2% in the year-ago fiscal. Also, there will be some cautiousness with a private report indicating that markets view the rally in Brent oil prices, triggered by geopolitical tensions, as a threat to the improvement in India's FY20 current account deficit and forecasts for a balance of payment surplus. However, some respite may come later in the day with Finance minister Nirmala Sitharaman’s statement that the government is taking various steps to simplify the taxation system and eliminate harassment of honest taxpayers. Some support may also come with the government data on national income showing that the country’s per-capita monthly income is estimated to have risen by 6.8% to Rs 11,254 during 2019-20. Meanwhile, as per a new amendment made to the norms by the Insolvency and Bankruptcy Board of India (IBBI), a secured creditor cannot sell assets of a company undergoing liquidation process to any person barred from submitting an insolvency resolution plan. Reality stocks will be in focus with a private report that despite a slowdown in the economic, housing sales witnessed a marginal rise 2019 across eight major cities to nearly 2.46 lakh units. There will be some reaction in metal stocks with ICRA’s statement that prices of aluminium and copper are showing signs of recovery in the last three months as trade tensions in international markets have eased to an extent leading to an improvement in sentiment.

The US markets ended lower on Tuesday as investor caution persisted amid a dispute between the United States and Iran. All the Asian markets are trading in red on Wednesday following reports that rockets were fired at an Iraqi air base that hosts American troops.

Back home, Indian equity bourses came back in green terrain in Tuesday’s trading session, with Sensex and Nifty ending higher by around 0.50% each. The start of the day was fabulous, aided with Commerce and Industry Minister Piyush Goyal’s statement that use of artificial intelligence (AI) in different forms can help achieve the target of making India a $5 trillion economy in the coming years. Adding more relief on the street, the Reserve Bank of India (RBI) has revised the Supervisory Action Framework (SAF) for urban cooperative banks (UCBs), with an aim to ensure expeditious resolution of financial stress being faced by some of them. But, indices pared some of gains in noon deals, amid a private report that India's government is likely to cut spending for the current fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of the biggest tax shortfalls in recent year. It added that Asia's third largest economy, which is growing at its slowest pace in over six years because of lack of private investment, could be hurt further if the government cuts spending. Some concerns also came with reports that markets view the rally in Brent oil prices, triggered by geopolitical tensions, as a threat to the improvement in India’s FY20 current account deficit and forecasts for a balance of payment surplus. Finally, the BSE Sensex gained 192.84 points or 0.47% to 40,869.47, while the CNX Nifty was up by 59.90 points or 0.50% to 12,052.95.