Markets likely to open in green on Friday

Indian markets ended lower on Thursday after government data showed a surprise drop in December industrial output and a rise in January inflation to a six-year high. Today, the start of session is likely to be in green following Asian peers and ahead to the wholesale inflation numbers to be out later in the day. Traders will be getting encouragement with report that foreign investors turned net buyers in the Indian markets in the December quarter, pumping in a staggering $6.3 billion on the back of the government's intent to bring reforms for supporting the economic growth. Some support will also come as global ratings agency Standard and Poor's affirmed India's sovereign rating at BBB- with stable outlook, saying the country's GDP growth is likely to gradually recover towards longer-term trend rates over the next two to three years. Besides, the Reserve Bank of India’s (RBI) data showed that banks credit and deposits grew at 7.13 percent and 9.91 percent to Rs 101.02 lakh crore and Rs 133.24 lakh crore, respectively, in the fortnight ended January 31. Traders may take note of report that the Office of the US Trade Representative (USTR) said India has been removed from the list of developing countries and instead will now be considered a developed nation. However, there may be some cautiousness with the International Monetary Fund’s (IMF) communications director Gerry Rice’s statement that India's economy looks weaker than the IMF projected earlier in January and the government needs to focus on more ambitious structural and financial sector reform measures. Meanwhile, markets watchdog Securities and Exchange Board of India (SEBI) has issued guidelines for portfolio managers and said they cannot charge upfront fee from clients. There will be some buzz in the banking stocks with Moody's report that the RBI’s recent asset recognition norms that allows banks not to treat real estate loans as restructured for one year is credit negative for Indian banks. Construction industry stocks will be in focus as India Ratings revised its outlook for the construction industry to negative for FY21 on the back of muted order inflows and subdued bank credit flow. There will be some reaction in textile stocks with Union Textile Secretary Ravi Capoor’s statement that the Central government would address all issues in its new National Textile Policy which is likely to be announced in a couple of months.

The US markets ended in red on Thursday as investors grappled with a jump in reported coronavirus cases and the virus’ possible economic impact. Asian markets are trading mostly higher on Friday as China is set to halve tariff rates on certain US products with effect later during the day.

Back home, Indian equity benchmarks faced rough ride on Thursday’s trading session, with Sensex and Nifty ending lower by around 0.25% each. After a cautious opening, key indices remained lackluster throughout the day, as India's factory output growth, measured in terms of Index of Industrial Production (IIP), contracted by 0.3% in December 2019 as compared to expansion of 2.5% in December 2018, mainly on account of a decline in manufacturing sector output. Adding more worries among traders, India’s retail inflation based on Consumer Price Index (CPI) jumped to 7.59% in January 2020. The CPI was 1.97% in January 2019 and 7.35% in December 2019. Weak trade continued over the Dalal Street in the second half of the trading session, on the back of Finance Minister Nirmala Sitharaman’s statement that Goods and Services Tax (GST) compensation to states is delayed due to inadequate realisation of cess and that the Centre was not according any differential treatment to states. Market participants paid no heed towards Chief Economic Advisor Krishnamurthy Subramanian’s statement that the coronavirus outbreak in China provides an opportunity for India to expand exports. India is one of China's leading trade partners in Asia and has a huge trade deficit with that country. Finally, the BSE Sensex lost 106.11 points or 0.26% to 41459.79, while the CNX Nifty was down by 26.55 points or 0.22% to 12174.65.