Markets to get flat-to-negative start on Friday

07 Feb 2020 Evaluate

Indian markets extended their northward journey for fourth consecutive session on Thursday after the Reserve Bank of India (RBI) relaxed conditions to boost credit growth to the real estate sector. Today, the markets are likely to make flat-to-negative start amid lackluster trade in Asian peers over rising concerns of coronavirus in China. Investors will be keeping an eye on the Delhi Assembly polls to be held February 08. There will be some cautiousness with ICRA’s report that weak consumer sentiment, the slowdown in the infrastructure sector, and benign commodity prices have negatively impacted the performance of companies in Q3FY20. Also, traders will be reacting to report that the RBI projected the economy to expand by 6% during the next financial year, pegging it at the lower end of the GDP growth estimate of the Economic Survey. Besides, Central and state tax officers will share information about taxpayers for enforcement action as the government looks to tighten enforcement measures to check GST evasion. However, some support may come later in the day with RBI Governor Shaktikanta Das’ statement that the Rs 1-lakh-crore of long-term repos are aimed at helping banks lower their lending rates, thus quickening the monetary policy transmission. Traders may take note of private report that if you want to reach a $5 trillion economy, the outstanding credit, which is around Rs 95-98 trillion, it will have to be doubled, which means need to grow (credit) at around 15 percent. Meanwhile, markets watchdog SEBI came out with guidelines for compulsory performance benchmarking for Alternative Investment Funds (AIFs) as part of efforts to streamline disclosure standards. aviation stocks will be in focus with airlines body IATA’s statement that after four years of double-digit growth, the Indian domestic passenger traffic rose by just 5.1 per cent in 2019, down from 18.9 per cent in 2018. There will be some reaction in public sector undertakings (PSUs) stocks with minister of state for telecom and IT Sanjay Dhotre’s statement that five PSUs owe the Department of Telecommunications (DoT) 99% of the total Rs 2.65 lakh crore as dues on the basis of adjusted gross revenue (AGR). There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended in positive territory on Thursday after China said it would cut in half tariffs on $75 billion of US imports, signaling it would follow through with parts of a recently signed trade agreement. Asian markets are trading mostly in red on Friday as the growing death toll and economic damage from a new virus spreading from China weighted over investors’ sentiments.

Back home, the Reserve Bank of India's (RBI) status quo cheered Indian equity markets on Thursday, with Sensex & Nifty ending higher by 0.40% each. The start of the day was on firm note, amid a private report that India can achieve the target, to become a $5 trillion economy by 2025, by using automation technologies such as, artificial intelligence, natural language processing and machine learning that will drive increased efficiencies and new jobs resulting in economic growth in the next few years. But, volatility hit over the street during late morning deals, as NITI Aayog member Ramesh Chand said that Indian agriculture sector is facing issues in making available customised technology to farmers and implementation of policy reforms, especially at the state level. However, bourses again staged recovery to settle higher, after the RBI kept repo rate unchanged at 5.15% and tweaked maintenance of cash reserve ratio (CRR) norms by providing relaxation in calculation of total deposits, in a bid to increase lending to MSME as well as to auto and home segment. The move will encourage lending towards these targeted sectors having multiplier effect by banks as they will get exemption in CRR over incremental lending. The street paid no heed towards a report of US Chamber of Commerce's Global Innovation Policy Center stating that India's slipped to 40th position on the International Intellectual Property (IP) Index, which analyses the IP climate in 53 global economies, this year. Finally, the BSE Sensex gained 163.37 points or 0.40% to 41,306.03, while the CNX Nifty was up by 48.80 points or 0.40% to 12,137.95.

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