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Domestic Market View
Benchmarks likely to make slightly positive start
Indian markets extended their northward journey for third straight session on Monday following firm global cues and buying in blue-chip counters such as Tata Motors, TCS and Coal India. Today, the markets are likely to make slightly positive start tracking optimistic monsoon forecast and good trade data. The India Meteorological Department (IMD) has said that the country is likely to have near normal monsoon this year with a well distributed rainfall which could be beneficial for the agriculture sector. It added that the seasonal rainfall is likely to be 96% of the Long Period Average (LPA) with a model error of plus or minus 5%. It also said weak El Nino conditions are likely to prevail during the monsoon season with reduced intensity. Besides, the government data has showed that India’s exports grew by 11% to $32.55 billion in March on account of higher growth in sectors including pharma, chemicals and engineering. Imports rose by 1.44% to $43.44 billion during the month. However, trade deficit narrows to $10.89 billion as compared to $13.51 billion in the same month last year.
Some support will also come with a private report that the rise in banks’ profitability, thanks to a steady decline in dud assets, can give a 0.60% boost to Gross Domestic Product (GDP) in fiscal 2020. Meanwhile, Finance minister Arun Jaitley has said fast economic growth and rapid urbanisation would slash the number of people in extreme poverty by 2021 and end it completely in the decade after that. However, there may be some cautiousness amid subdued global cues. There will be some buzz in the agriculture related stocks with report that the government has decided to extend the duration of the New Urea Policy from April 1 this year till further orders to ensure smooth supply of nutrients to farmers. The extension of the policy would facilitate in continuation of operations of urea plants and ensure regular supply of urea to the farmers. There will be some reaction in textile industry stocks with report that India’s cotton crop production may fall 7.87% to 343 lakh bales (of 170 kg each) in the 2018-19 season, mainly due to drought in many cotton-growing regions. There will be some earnings announcements too to keep the markets buzzing.
Indian indices maintain gaining momentum for third straight session
Maintaining gaining momentum for third straight session, Indian equity bourses ended Monday’s trading session on cheerful note. The markets started the session with marginal gains, as India’s factory output, as measured in terms of the Index of Industrial Production (IIP), slowed down to 20-month low of 0.1% in February, mainly due to contraction in the manufacturing sector. It had grown by 6.9% in February 2018. Separately, India’s retail inflation, measured in Consumer Price Index (CPI), continued rising trend for second straight month and increased marginally to 2.86% in March 2019 as compared to 2.57% in February 2019, on account of increase in prices of food articles and fuel. But, key indices managed to add gains during the session, aided by Former Niti Aayog vice chairman Arvind Panagariya’s statement that the Modi government has achieved ‘major successes’ in social sector programmes like Ayushmaan Bharat, PM-Kisan and rural electrification. Besides, he added that this government has made an ‘unprecedented progress’ in tackling corruption.
Upward rally continued during second half of the session, on the back of heavy buying coupled with positive cues from other Asian markets. The street took support with a report stating that foreign investors have pumped in a net sum of Rs 11,096 crore into the Indian capital markets in April so far, driven by global and domestic factors. Foreign portfolio investors (FPI) were net buyers for the previous two months as well, infusing a net sum of Rs 11,182 crore in February and Rs 45,981 crore in March. Adding more comfort among traders, a private report showed that financing deals for Indian infrastructure projects are surging on market expectations that the next government will come through with at least some of the spending that politicians are promising now during a heated election campaign. The market participants overlooked rising WPI inflation data report in late noon deals. India’s Wholesale price index (WPI) inflation has come in at 3.18% in the month of March as compared to 2.93% (provisional) for the previous month.
Stocks related to the fertilizer sector remained in limelight, as the Cabinet Committee on Economic Affairs approved the proposal of the Department of fertilizers to extend the duration of New Urea Policy-2015 from April 1, 2019 till further orders, except for the provisions which stand already amended vide notification dated March 28, 2018. Besides,renewable energy sector stocks also remained in focus after the Union Cabinet gave its approval for a Cooperation Agreement between Ministry of New & Renewable Energy of India and Ministry for Energy, Utilities and Climate of the Kingdom of Denmark on strategic sector cooperation in the field of Renewable Energy with a focus on Offshore Wind Energy and a Letter of Intent to establish an Indo-Danish Centre of Excellence for renewable energy in India.
Global Market Overview
Asian markets end mostly higher on Monday
Asian markets gave up most of their early gains but managed to end mostly higher on Monday as investors looked for further signs of a pick-up in global growth and progress in US-China trade talks. US Treasury Secretary Steven Mnuchin said he hoped US-China trade talks were approaching their final lap. Besides, easing fears of a slowdown in global growth on signs of stabilization in the Chinese economy further boosted investor sentiment. Meanwhile, Chinese data showing exports rebounded in March to a five-month high while new bank loans jumped by far more than expected. Japanese shares hit a four-month high, with sentiment lifted by a weaker yen and positive cues from global markets. However, Chinese shares gave up early gains to end lower.
US markets end marginally lower as bank earnings disappoint
The US markets ended marginally lower on Monday after earnings from Goldman Sachs Group Inc. and Citigroup Inc. underwhelmed amid concerns over the banking sector’s health. The drop by Goldman Sachs comes after the company reported better than expected first quarter earnings but revenues that missed expectations. Shares of Citigroup (C) also closed just below the unchanged line even though the company reported first quarter earnings that exceeded analyst estimates. Nonetheless, traders seemed reluctant to make more significant moves ahead of the release of quarterly results from a slew of other big-name companies in the coming days. Bank of America (BAC), Johnson & Johnson (JNJ), IBM (IBM), Morgan Stanley (MS), PepsiCo (PEP), and American Express (AXP) are among the companies due to report their results this week.
On the economic front, after reporting an unexpected slowdown in the pace of growth in New York manufacturing activity in the previous month, the Federal Reserve Bank of New York released a report showing growth picked up somewhat in April but remained fairly subdued. The New York Fed said its headline general business conditions index climbed to 10.1 in April after falling to 3.7 in March, with a positive reading indicating growth in regional manufacturing activity. Street had expected the index to rise to 6.0. The bigger than expected increase by the headline index came as the new orders index rose to 7.5 in April from 3.0 in March. The shipments index also inched up to 8.6 from 7.7. On the other hand, the report said the number of employees index edged down to 11.9 in April from 13.8 in March, indicating modestly slower job growth. The prices paid index also slumped to 27.3 in April from 34.1 in March, while the prices received index slid to 14.0 from 18.1.
Dow Jones Industrial Average dropped 27.53 points or 0.10 percent to 26384.77, Nasdaq declined 8.15 points or 0.10 percent to 7976.01 and S&P 500 was down by 1.83 points or 0.06 percent to 2905.58.
Index closed a day at 11690 with gains of 47 points on and formed small bullish candle on daily chart. Index has shifted its support to 11640-11600 zone and resistance is coming near 11760-11800 zone any breakout above 11760 can see fresh move in index otherwise index will be in tight range of 11550-11760 zone. Nifty bank has support near 29950-29800 zone and resistance is coming near 30235-30440 zone.
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