Markets to get slightly positive start on Wednesday

05 Feb 2020 Evaluate

Indian markets ended significantly higher on Tuesday, as investors opted for low-level buying in beaten-down stocks, tracking firm global cues and the recent slide in crude prices. Today, the markets are likely to make flat-to-positive start tracking positive cues from global markets. Investors will be eyeing services PMI data for the month of January due later in the day. Also, The RBI's Monetary Policy Committee meeting will be closely monitored by the domestic market participants. Traders will be taking some support with report that India and the US are set to seal a trade deal during President Donald Trump's planned visit to India in the last week of this month. Some support will also come with report that the Foreign Direct Investment (FDI) in India has been increasing on an annual basis and was at $34.90 billion till November of this fiscal. The FDI stood at $62 billion in the full 2018-19 fiscal, while at $60.90 billion in 2017-18 and $60.22 billion during 2016-17. Though, some cautiousness may come with report that direct tax collections from April 2019 to February 3, 2020, are at Rs 7.40 lakh crore versus the revised budget estimates of Rs 11.70 lakh crore. Investors may take note of Moody's Investors Service’s statement that economic growth projections made by Finance Minister Nirmala Sitharaman in her Budget for 2020-21 appear ambitious given the structural and cyclical challenges facing the Indian economy. Stating that growth outlook will remain weak, it has put real GDP growth during the current fiscal ending March 31 at 4.9 per cent, slightly below the government's forecast of 5 per cent. For the next fiscal, it estimated real GDP growth of 5.5 per cent, lower than 6-6.5 per cent projected by the government's Economic Survey. Meanwhile, Markets regulator SEBI came out with a common application form for registration of foreign portfolio investors in order to enhance operational flexibility and ease of access to Indian capital market. NBFCs stocks will be in focus with rating agency CRISIL’s report that realty exposure of non-banking financial companies (NBFCs), which is out of moratorium, has a bad loan ratio of over 10 per cent as of September 2019 and the fear is rest of the book under moratorium may go the same way. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended higher on Tuesday as fears of a heavy economic impact from the coronavirus outbreak waned after China's central bank intervened. Asian markets are trading in green on Wednesday on hopes of additional Chinese stimulus to lessen the economic impact of the coronavirus outbreak.

Back home, bulls retained full charge over Dalal Street on Tuesday, with Sensex & Nifty ending higher by around 2.30% each. After a fabulous start, indices remained firm for the whole day, aided with Minister of State for Finance Anurag Thakur’s statement that the economy is not in recession and India recorded the highest average growth among the G-20 nations during 2014-19. The minister also mentioned about continuous measures being taken by the government to improve the overall investment climate and boost the economic growth. Adding some comfort, Finance Minister Nirmala Sitharaman said that the money raised through disinvestment will be used to develop infrastructure, which will have multiplier effect on the economy and not bridging revenue deficit. Key benchmarks extended their northward journey in the second half of the trading session to settle near their intraday high points, after Niti Aayog CEO Amitabh Kant termed the Union Budget pragmatic and said the government is determined to bring Indian economy back to a high trajectory growth path. He further said if the government will be able to achieve disinvestment target of 2020-21 then the Budget will be very successful. Besides, Reserve Bank of India Governor Shaktikanta Das headed six-member rate setting panel started its three-day brainstorming meeting in the backdrop of Union Budget projecting a widening of fiscal deficit amid slowing economy and hardening inflation. Finally, the BSE Sensex gained 917.07 points or 2.30% to 40,789.38, while the CNX Nifty was up by 271.75 points or 2.32% to 11,979.65.

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