Benchmarks likely to make flat-to-negative start

24 Jan 2020 Evaluate

Indian markets snapped 3-day losing streak and ended higher on Thursday led by gains in Banking and IT stocks amid fall in crude oil prices. Today, the start of session is likely to be flat-to-negative tracking mixed cues from global markets. Traders will be concerned over a private report stating that government's tax revenue shortfall for FY20 is estimated to be at around Rs 2 lakh crore. As per the report, the revenue shortfall from direct tax sources is being pegged at around Rs 1.5 lakh crore to Rs 1.8 lakh crore, while that from indirect sources is estimated to be at around Rs 30,000 crore to Rs 60,000 crore. However, some respite may come later in the day with Union Commerce and Industry Minister Piyush Goyal’s statement that the Indian economy is well-poised to take off and the government is committed to ensure economic growth. Traders may take note of report that the Reserve Bank of India (RBI) has raised the investment limit for FPIs in government and corporate bonds to bring in more foreign funds into the market. Meanwhile, in the fourth special open market operation (OMO) auctions, the RBI bought Rs 10,000 crore worth of long-term securities and sold Rs 2,950 crore worth of short-term government bonds. There will be some buzz in the Oil & Gas stocks as Oil Minister Dharmendra Pradhan said that India will see an investment of over Rs 4 lakh crore in development of gas supply and distribution infrastructure in the next five years as it chases the target of more than doubling the share of the environment-friendly fuel in its energy basket to 15 percent by 2030. Auto stocks will be in focus as Investment Information and Credit Rating Agency (ICRA) said that demand for two-wheelers in the domestic market is likely to remain weak in the near-term on the back of implementation of BS-VI norms and it expects that the new norms will lead to contraction of volume by 8-10 per cent in FY20. There will be some reaction in Telecom stocks as the government asked the Department of Telecommunications (DoT) not to take any coercive action against telecom companies for non-payment of adjusted gross revenue (AGR) dues until further court orders. There will be lots of earnings reaction based on the performance of the companies, to keep markets in action.

The US markets ended mostly higher with marginal gains on Thursday as mixed earnings reports and a worsening viral outbreak unsettled investors. Asian markets are trading mixed on Friday after the world’s health body called it a little too early to declare a coronavirus outbreak a global emergency.

Back home, Indian equity bourses came back in green on Thursday with significant gains of over 0.60% each. The start of the day was on positive note, aided with CRISIL’s statement that it expects a recovery in rural demand in the country from March-April onwards owing to an increase in farm incomes, good monsoons and improving urban demand. However, in late morning deals, most of gains got trimmed, amid a private report stating that rising inflation is expected to keep the Reserve Bank of India from cutting rates again until late this year, while an expansionary federal budget due next month attempts to put a floor under rapidly-slowing growth. But, bourses again gained the traction in the second half of session, as asserting that Indian economy is well-poised to take off, Union minister Piyush Goyal said that there is a lot of enthusiasm for making investments in the country. The Commerce & Industry Minister also said the government will hold discussions with Britain & European Union on free trade agreements. Adding more relief, the government decided to introduce several measures to ease the process, considering the difficulties faced by trade and industry in filing of returns. As per the Finance Ministry notification, now GST taxpayers can file their GSTR-3B returns in a staggered manner. Finally, the BSE Sensex gained 271.02 points or 0.66% to 41,386.40, while the CNX Nifty was up by 73.45 points or 0.61% to 12,180.35.

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