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Markets to extend gains with a positive start
Jan-18-2019

Indian markets ended Thursday’s session flat, as gains in IT and financials stocks were offset by losses in healthcare and consumer stocks. Investors were also cautious ahead of Q3 results by Reliance Industries and Hindustan Unilever. Today, the markets are likely to make optimistic start mirroring firm cues from global markets. Traders will be getting encouragement with India Ratings and Research (Ind-Ra), a Fitch Group company, report stating that the country’s economy is likely to grow a tad higher at 7.5 per cent in 2019-20 on account of steady improvement in major sectors -- industry and services. It further said Gross Domestic Product (GDP) growth would have been even better but for the global headwinds caused by an abrupt rise in crude oil prices and strengthening of the US dollar, among other factors. Traders may also take note of report that ahead of the monetary policy review, India Inc has urged the Reserve Bank of India (RBI) to cut interest rate and reserve ratio to prop up growth. Industry chambers suggested various measures to ease tight liquidity situation and reduce high cost of credit in the light of consistently falling inflation. There will be some buzz in the rubber industry related stocks with Union minister for commerce and Industry and Civil Aviation Suresh Prabhu’s statement that the government is developing a National Rubber Policy to address various issues concerning the sector. The policy by the commerce and industry ministry will address issues that will boost productivity. Prabhu said the rubber industry will continue to grow faster, create more employment opportunities, increase exports and add to the economic output of India. Also, there will be some reaction in agriculture related stocks with report that farmers could get annual income support of Rs 15,000 per hectare if the Niti Aayog’s proposal for an upfront subsidy through direct benefit transfer is accepted. The Aayog has suggested that all subsidies for agriculture, including fertiliser, electricity, crop insurance, irrigation and interest subvention be replaced by income transfer. There will be some important earnings announcements too to keep the markets buzzing.

The US markets extended their gains for third straight session on Thursday on optimism the US would ratchet back tariffs on Chinese imports, a conflict that has rattled financial markets in recent months. Asian markets were trading higher on Friday, as hopes for a thaw in the US-China trade conflict fed investor appetites for risk assets.

Back home, key Indian equity benchmarks took U-turn to settle Thursday’s trading session in green territory, with both Sensex and Nifty gaining around 0.15% each. After a firm start, the key indices remained positive for the most part of the day, as Reserve Bank of India (RBI) come out with a new policy for overseas borrowings, allowing all eligible entities to raise foreign funding under the automatic route and removing sectoral curbs. All eligible borrowers can now raise external commercial borrowings (ECB) up to $750m per fiscal under the automatic route. Traders got encouragement after a working group of the Commerce and Industry Ministry came out with a blueprint suggesting a host of long and short-term measures to increase the size of India's economy to $ 5 trillion by 2025. It also added that India’s potential to achieve a $5 trillion GDP by 2024-25 is within the realm of possibility. Some support also came with a report that Consumer Sentiment Index rebounded in January on account of easing inflation, increasing liquidity and stabilising US-China trade war. India Primary Consumer Sentiment Index has risen over the previous month of November, signalling rising optimism going ahead. However, the markets turned volatile during the noon deals, after a US think tank claimed that H-1B workers are vulnerable to abuse and frequently placed in poor working conditions, seeking reforms like a substantial increase in wages to those holding the visa, popular among Indian IT professionals. Weak cues from global markets also hit the trading sentiments. But, the trade soon bounced back to end the session in green, amid reports that the government simplified process for seeking income tax exemption by startups on investments from angel funds and prescribed a 45-day deadline for a decision on such applications. Adding some optimism, a private report stated that India's growth to be the best in the Asian region in 2019. It is also positive on the market with a Nifty target of 12,170 for the year end which is a fourteen percent upside from current levels. Some comfort also came with ICRA’s latest report expressing confidence that mid-sized construction players are likely to see significant growth opportunities, with improving credit profiles and strengthening order book aided by the government's push towards infrastructure development projects. Finally, the BSE Sensex gained 52.79 points or 0.15% to 36,374.08, while the CNX Nifty was up by 14.90 points or 0.14% to 10,905.20.

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