Markets likely to get optimistic start amid fall in oil prices

Indian markets ended lower for second straight session on Monday in line with global markets as the death toll from a coronavirus outbreak exceeded the SARS epidemic. Today, the markets are likely to get an optimistic start after oil prices fell sharply overnight coupled with positive leads from global markets. Some support will come with report that the Reserve Bank of India (RBI) announced detailed rules for exempting incremental car, home and micro, small and medium enterprises (MSMEs) loans from maintaining cash reserve ratio (CRR). The RBI said CRR will not have to be maintained for five years or for the tenure of the loan, depending upon which-ever is less. This will essentially mean a lower cost for banks and will help improve liquidity. Traders may take note of Agriculture Minister Narendra Singh Tomar’s statement that India, the world's largest consumer and importer of pulses, is on track to become self-sufficient in production of the protein-rich commodity and will further boost the output to meet global demand. Though, there may be some cautiousness with Fitch Ratings’ statement that the RBI extending the MSME loan restructuring scheme and allowing relaxation in asset classification for certain real-estate projects signify a gradual shift away from the regulator's earlier effort to enhance quality and transparency of asset classification by banks. Meanwhile, the government said a new draft National Tourism Policy has been formulated with focus on employment generation and development of tourism in a sustainable manner. There will be some buzz in the banking stocks with Finance Minister Nirmala Sitharaman’s statement that public sector banks' (PSBs) bad loans came down to Rs 7.27 lakh crore at the end of September 2019, on host of measures taken by the government to improve financial health of the banks in the country. Reality stocks will be in focus with report that in a relief to realty players, the National Company Law Appellate Tribunal (NCLAT) has held that any insolvency process initiated by a flat buyer or financial institution would be limited to the project concerned only and not impact other projects of developers. There will be some reaction in coal stocks with the government data showing that India's coal imports in November rose 8.6% from a year earlier to 21.83 million tonnes, following three straight months of decline. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended higher on Monday as investors looked past the potential economic hit from the spreading coronavirus to prepare for more corporate earnings. Asian markets are trading mostly in green on Tuesday following overnight gains on Wall Street.

Back home, Indian equity markets ended Monday's session on lower note for the second straight day. After a weak start, indices traded in red terrain, impacted with ICRA’s statement that the GST compensation fund may see a shortfall of Rs 15,000-25,000 crore for 2019-20, and it pegged the unpaid GST compensation to the states at Rs 60,000-70,000 crore for the October 2019-January 2020 period. Adding more worries, Former Finance Minister P Chidambaram said that the NDA government has not defined whether the $5 trillion dollars economy it aims to achieve is real GDP or nominal and claimed real GDP would not touch the figure at the current growth level by 2024 or 2025. Key indices remained under pressure for the whole trading day, on the back of negative cues from the global markets. The street remained worried, amid reports that the momentum of the bilateral trade between India and the US is moving in favor of Washington, mainly due to the sudden increase in energy import by New Delhi. Market participants were seen taking note of Union Minister Anurag Thakur’s statement that the moderation in India's growth coincides with a deceleration in growth of global output and the IMF has projected the country's GDP growth to pick up to 5.8 per cent in 2020. Finally, the BSE Sensex lost 162.23 points or 0.39% to 40979.62, while the CNX Nifty was down by 66.85 points or 0.55% to 12031.50.