Benchmarks to make gap-up opening on Thursday

Indian markets ended slightly lower on Wednesday as a retaliatory attack on US-led forces by Iran spurred another crude rally, stoking fears of rising inflation at one of the world's top oil importers. Today, benchmarks are likely to make gap-up opening tracking firm cues from global markets. Some support will come with the Industry body Ficci’s statement that the government should infuse capital in the economy without worrying about the fiscal deficit target as the GDP growth is estimated to slip to 11-year low of 5 percent during 2019-20. Ficci President Sangita Reddy said the 5 per cent GDP growth estimate for the current financial year is on expected lines as the economic expansion in the first half of the year has been moderate. However, there may be some cautiousness as the World Bank has projected a 5 per cent growth rate for India in the 2019-2020 financial year, but said it was likely to recover to 5.8 per cent in the following financial year. Besides, State Bank of India’s economic research department has cut its projection for gross domestic product (GDP) for FY20 to 4.6 per cent, based on current available trends, against 5 per cent projected earlier, even as it assessed that India could be now staring at a sub-6-per-cent growth for two successive years. Meanwhile, the cabinet committee on parliamentary affairs has recommended holding the Budget session in two phases from January 31 to April 3, with the Union Budget to be presented on February 1. Oil stocks will be in focus with Oil Minister Dharmendra Pradhan's statement that in only the second instance of the government directly funding a gas pipeline, the Cabinet Committee on Economic Affairs (CCEA) approved a Rs 5,559 crore viability gap funding for the proposed North-East gas grid. There will be some reaction in coal stocks with report that in a bid to attract investments and boost domestic coal production, the government has approved promulgation of an ordinance to open up coal mining in the country to non-coal companies while removing restrictions on end-use of the fuel.

The US markets settled higher on Wednesday after President Donald Trump said there were no American casualties in the Iranian missile strikes and that Tehran appeared to be standing down, sparking a relief rally in markets. All the Asian markets are trading in green on Thursday and oil beat a retreat, as the US and Iran backed away from the brink of further conflict in the Middle East and investors reversed their safety plays.

Back home, Indian equity bourses ended Wednesday's trade on lower note. The start of the day was in deep red, as National Statistical Office in its First Advance Estimates of National Income, 2019-20, stated that India's GDP growth is expected to fall to an 11-year low of 5% in the current fiscal year, as compared to the growth rate of 6.8% in 2018-19, mainly due to poor showing by manufacturing and construction sectors. Losses got intensified in noon deals, amid a report that company boards are operating under increased political and regulatory pressure to improve their governance standards, and the resultant risk averseness is a prime reason for the growth slowdown. However, in the last leg of the trading session, key benchmarks managed to stage recovery to settle the day marginally lower, taking support 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. Market participants took a note of Union Minister of Commerce and Industry Piyush Goyal’s statement that the Micro, Small and Medium Enterprises (MSME) sector has better adaptability to cater to the export market due to its smaller size and can adapt to market change sooner. Finally, the BSE Sensex lost 51.73 points or 0.13% to 40817.74, while the CNX Nifty was down by 27.60 points or 0.23% to 12025.35.