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Benchmarks likely to open in green; GST meeting eyed
Sep-20-2019

Indian markets ended lackluster session in red territory on Thursday, with cut of over a percent, amid selling seen across the board as oil prices rose sharply once again. Today, the markets are likely to open in green amid positive leads from Asian peers. Traders will be getting some encouragement with Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that there is room for rate cut as the growth has slowed down. The policy objective of the monetary policy is to maintain price stability, keeping in mind the objective of growth. Separately, Das expressed the hope that the ongoing crisis in Saudi Arabia that has spiked crude prices to multi-year highs will have limited impact on inflation and fiscal numbers. Some support will also come with report that Finance minister Nirmala Sitharaman is likely to unveil measures to boost economic growth, which slipped to a six-year low of 5% in the April-June quarter. Investors will be looking ahead to the Goods and Services Tax (GST) Council meeting later in the day to take up a host of issues and on top of the agenda will be recommendations made by the GST Council's Fitment Committee. As per the report, the committee has rejected the proposal to cut GST on biscuits and for the auto sector. However, some cautiousness may come with report that the Organisation for Economic Co-operation and Development (OECD) appears to be the most pessimistic on India's economy among think tanks, as it cut the GDP growth forecast by 1.3 percentage points to 5.9 per cent for 2019-20. Meanwhile, capital market regulator SEBI has set up a high-level panel to suggest possible structures and regulations for creating 'social stock exchanges' to facilitate listing and fund-raising by social enterprises as well as voluntary organizations. Banking stocks will be in focus as credit rating agency Moody’s said that the increasing liquidity stress among real estate developers would indirectly hit Indian banks and is thus credit negative for the domestic lenders. There will be some buzz in the power stocks as India Ratings & Research (Ind-Ra), a Fitch Group company, maintained a stable outlook for wind and solar power sectors for the remaining part of financial year 2019-20 (FY20).

The US markets ended mostly higher on Thursday with modest gains as the US and China kicked-off deputy level trade negotiations for the first time in close to two months. Asian markets are trading mostly in green on Friday as economic stimulus around the world eased fears of economic deceleration.

Back home, weakness hit over Indian equity benchmarks on Thursday, with both the larger peers, Sensex and Nifty, closing lower by around 1.25% each. The markets made a lackluster start of the day, as tax collection missed target by a wide margin. As against a steep 17.5 percent higher tax collection budgeted for the full year, the government could mop-up only 4.7 percent more so far this year, with the direct tax kitty growing to Rs 5.50 lakh crore as of September 17, up from Rs 5.25 lakh crore a year-ago. Adding more concerns, the India Meteorological Department’s (IMD) report showed that monsoon rains in India in the week to September 18 were above average for a third straight week, with floods hitting many districts in the central parts of the country and damaging crops such as soybean and pulses. Indices remained under pressure for the whole day, amid a private report that India’s slowdown & a simmering shadow banking crisis is putting Prime Minister Narendra Modi’s goal of crafting a $5 trillion economy by 2025 at risk. Traders paid no heed towards reports that the government decided to set up an 11-member panel. The latest decision is in line with the government's objective of promoting ease of doing business for law abiding corporates, fostering improved corporate compliance for stakeholders at large & also to address emerging issues having impact on the working of companies in the country. Investors also overlooked Niti Aayog CEO Amitabh Kant’s statement that the government is doing everything possible to turn around the Indian economy & bring it back to a high trajectory growth path. Finally, the BSE Sensex fell 470.41 points or 1.29% to 36,093.47, while the CNX Nifty was down by 135.85 points or 1.25% to 10,704.80.
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