Markets to start on negative note on sluggish regional cues

Indian equity benchmarks ended Friday’s trade on a negative note, as India's Wholesale Price Index (WPI) inflation worsened to 3.1 percent in January from 2.59 percent in December, registering a 0.1 percent increase. Today, the start of the session is likely to be on negative side on sluggish regional cues. Traders will remain concern on report that India’s exports dropped 1.66 per cent to $25.97 billion in January, the sixth straight month of contraction, on account of a significant fall in shipments of petroleum, plastic, carpet, gems and jewellery, and leather products. Imports also fell for the eighth consecutive months, down 0.75 per cent to $41.14 billion in January, widening the trade deficit to a seven-month high of $15.17 billion. There will be some cautiousness too with former finance secretary Subhash Chandra Garg’s statement that the Budget for 2020-21 does not effectively address the objective of kick-starting economic growth and building momentum. Infrastructure investments in roads, railways and metros have been the major planks of infrastructure investment by the government. Garg said that in the broadest sense, the expenditure proposals of Budget 2020-21 present more of consolidation in the face of deteriorating economic and fiscal situation. However, some respite may come later in the day on report that Finance Minister Nirmala Sitharaman has said the 2020-21 union budget was prepared keeping the FRBM (Fiscal Responsibility and Budget Management) in mind even as she maintained she would be remembered for presenting the longest prepared budget than for longest speech on it. She added so in a way all these (measures) and more has been done that the FRBM, as an Act, we have to keep in mind and also comply with it. So we have not really breached the FRBM. We have not gone outlandish on it. Tea stocks will keep buzzing on report that Tea Board chairman P K Bezbaruah said that the statutory body should disassociate itself from the functioning of the age-old auction system and usher in a liberalised regime where private parties can enter. There will be some buzz in the insurance stocks as Irdai data showed India's non-life insurance companies registered a 7.2 per cent rise in their combined new premium collection at Rs 17,225.75 crore in January this fiscal. The 35 insurers' gross premium collection stood at Rs 16,076.28 crore in the same month a year ago. Among these, the 25 general insurance providers had a collective premium of Rs 14,643.26 crore during the month, up 2.2 per cent from the same period of 2019.

Asian markets are trading mostly lower in early deals on Monday as investors weighed the near-term hit on global growth from a fast-spreading coronavirus outbreak in China, although expectations of further policy stimulus helped stem losses.  US markets ended mostly higher on Friday after the Commerce Department said retail sales rose by 0.3 percent in January after edging up by a downwardly revised 0.2 percent in December.

Back Home, Indian equity bourses faltered for the 2nd straight day on Friday, with Sensex & Nifty losing around 0.50% each. The start of the day was on firm note, as rating 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. But soon, indices turned weak, with the International Monetary Fund’s 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. Volatility remained over the Dalal Street till the end of the trading session, on the back of weak cues from the European markets along with rising inflation in the country. India’s Wholesale price index (WPI) inflation spiked sharply to 3.1 percent in the month of January 2020 as against 2.59 percent for the previous month and 2.76 percent during the corresponding month of the previous year. Adding more anxiety among investors, a report by Moody's said that the Reserve Bank of India'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. Finally, the BSE Sensex lost 202.05 points or 0.49% to 41,257.74, while the CNX Nifty was down by 61.20 points or 0.50% to 12,113.45.