Benchmarks likely to make positive start on Wednesday

22 Jan 2020

Indian markets ended range-bound trade in red on Tuesday for second consecutive session after the International Monetary Fund (IMF) lowered growth estimate for India to 4.8% for 2019. Today, the markets are likely to open in green after heavy sell-offs in the last two sessions and as poor economic growth outlook raises prospects of further government measures in the Budget. Some encouragement will come with Union Minister Piyush Goyal’s statement that India is working on ways to have fairer and more equitable terms in its trade relationships with various countries. Besides, traders may take note of report that the government has set up a National Startup Advisory Council to advise the Centre on measures needed to build a strong ecosystem for nurturing innovation and start-ups in the country. Though, some cautiousness may come with a private report that direct tax collections between April to January 15 of this fiscal, have shown a negative growth of -6.1 percent. There will be some buzz in the Telecom stocks as the Supreme Court agreed to hear telcos' petitions to modify its October 24 order that made them liable to pay up more than Rs 1 trillion of adjusted gross revenue (AGR) dues by January 23. Auto stocks will be in focus with Automobile dealers' body FADA stating that retail sales of passenger vehicles in December 2019 declined 9 percent to 2,15,716 units year-on-year, as even the best offers failed to lift weak consumer sentiments. There will be some reaction in insurance stocks with global ratings agency Moody's Investors Service's statement that despite low penetration, the ongoing economic slowdown will impact insurance premium collections over the next two to three years. Also, there will be some buzz in the FMCG stocks with a private report stating that after falling for five quarters, a recovery in growth could be on the horizon for the country’s fast-moving consumer goods (FMCG) sector. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended in red on Tuesday amid reports that the Chinese coronavirus had spread to the US raising fears of a pandemic that might affect global economic growth. Asian markets are trading mostly higher on Wednesday amid authorities confirmed more than 300 cases of the virus in China and US President Donald Trump's impeachment trial formally opened in the Senate.

Back home, bears held their grip over Dalal Street on Tuesday, with Sensex & Nifty losing over 200 & 50 points, respectively. Markets made a sluggish start of the day, as the International Monetary Fund slashed India’s growth estimate to 4.8% for 2019. Though, it expects growth to be 5.8% in 2020 & rise to 6.5% in 2021. The street remained worried with a survey report stating that a record level of pessimism has creeped into the CEOs across the world regarding the worldwide economic growth. For the first time, more than half of the CEOs surveyed by global consultancy PwC said they believe the rate of global GDP growth will decline. Weakness persisted in the markets during the whole day, on the back of weak global markets. Traders remained pessimistic, even after the retirement fund body, Employees' Provident Fund Organisation (EPFO) in its latest Provisional Estimate of Net Payroll data report showed that India created 1162863 new jobs in the month of November 2019 as against revised figure of 647764 in October 2019. The street overlooked a UN report showing that India was among the top 10 recipients of Foreign Direct Investment in 2019, attracting $49 billion in inflows, a 16% increase from the previous year, driving the FDI growth in South Asia. Finally, the BSE Sensex lost 205.10 points or 0.49% to 41,323.81, while the CNX Nifty was down by 54.70 points or 0.45% to 12,169.85.

Puchho Befikar
SEBI Registered: Investment Adviser - INA000013323
Research Analyst - INH000000719