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Domestic Market View
Markets to make slightly negative start of F&O expiry session
Snapping three-day losing streak, Indian markets gained momentum and ended higher with gains of over a percent on Wednesday, as earnings optimism outweighed concerns over elevated oil prices. Today, the start of the F&O series expiry session is likely to be slightly negative tailing the weakness in Asian peers. Besides, lots of volatility may be seen towards the expiry of April series as traders rollover their positions. However, some relief may come with report that giving relief to composition scheme taxpayers under the GST, the finance ministry has allowed such businesses to file self-assessed tax return on quarterly basis in a simplified form. In yet another simplification, the Goods and Services Tax (GST) Council has added flexibility into the way a company can utilise the available input tax credit. Any company would now be eligible to use credit available against paid integrated GST (IGST) to set off tax liabilities of state GST (SGST) and central GST (CGST) in any proportion and in any order.
Moreover, the Finance Ministry has introduced changes in the e-way bill system, including auto calculation of distance based on PIN codes for generation of e-way bill and blocking generation of multiple bills on one invoice, as it seeks to crack down on GST evaders. There will be some buzz in the banking sector with report that the RBI has directed banks to disclose loans outstanding to Infrastructure Leasing & Financial Services and the provisions required to be made against the exposure, in their notes accompanying their fourth-quarter financial results. The RBI wants banks to disclose the total loans outstanding as well as the percentage of loans that are non-performing as per the Income Recognition and Asset Classification (IRAC) guidelines but not yet classified as NPAs. There will be some reaction in telecom sector stocks with ICRA’s report that the wireless broadband subscriber base continues to maintain its strong growth trajectory, increasing to 532 million in February 2019, or 45 percent of the total subscriber base, witnessing addition of 10.2 million during the month. There will be lots of earnings reaction based on the performance of the companies.
Domestic Market Overview
Bulls make comeback; Sensex reclaims 39k mark
Bulls made a roaring comeback on Wednesday’s trading session, with Sensex and Nifty closing with gains of more than a percent each. After a positive start, the markets remained in green terrain throughout the day, as the Reserve Bank of India (RBI) decided to infuse more liquidity into market. It will buy government securities under Open market operations (OMOs) for an aggregate amount of Rs 25,000 crore in May 2019 through two auctions of Rs 12,500 crore each. But, gains were limited, amid credit rating agency, Care Ratings’ latest report warning that a spike in crude oil prices by 10 percent owing to the US sanctions on Iranian crude exports can result in a 0.40 percent widening of the current account deficit (CAD), which can subsequently play out into a 3-4 percent fall in the rupee and also push up inflation by 0.24 percent.
Further, key indices gained traction in the dying hours of the trade, buoyed by Fitch Ratings’ report indicating that the RBI is the first central bank in the Asia-Pacific region to begin an explicit interest rate easing cycle buoyed by benign food inflation and easier global financial condition. Some support also came with a report that around 3.10 crore small farmers have so far received the first tranche of Rs 2,000 each under the PM-Kisan scheme and 2.10 crore peasants have got the second installment as well, costing Rs 10,500 crore to the exchequer. The market participants took note of another report that the Ministry of Corporate Affairs plans to start gathering ‘primary data’ from persons who have put in their money in chit funds and deposit-taking schemes, amid continuing efforts to clamp down on illicit fundraising activities.
Stocks related to the microfinance industry remained in focus, with ICRA’s latest report stating that the microfinance industry (MFI) is expected to grow at 20-22% in the current fiscal. The rating agency estimated Rs 3,500-4,700 crore of capital requirement for the industry over the next three years. Further, power sector stocks also remained in limelight, with rating agency ICRA in its another report that it has estimated 7-7.5 GW solar power capacity addition during the current financial year, which includes 1 GW of rooftop solar.
Finally, the BSE Sensex gained 489.80 points or 1.27% to 39,054.68, while the CNX Nifty was up by 150.20 points or 1.30% to 11,726.15.
Global Market Overview
Asian markets end mixed on Wednesday
Asian markets ended mixed on Wednesday as investors digested upbeat corporate earnings results from the US and looked forward to further progress in US-China trade talks. According to US Press Secretary Sarah Huckabee Sanders, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will head to Beijing next week for talks that start on April 30. Following those talks, Chinese Vice Premier Liu He will lead a delegation to Washington for further discussions that begin on May 8. Japanese shares ended lower as investors braced for a flurry of earnings reports due out on Friday and the 10-day Golden Week holiday starting this weekend. Meanwhile, Chinese shares ended largely unchanged after the country’s central bank extended 267.4 billion yuan ($39.8 billion) to some commercial banks to support liquidity in the banking system.
US markets end lower on Wednesday
The US markets ended lower with cut of around quarter percent on Wednesday, a day after the S&P 500 and Nasdaq carved out their first records in months, following earnings from high-profile companies, including Dow components Boeing and Caterpillar Inc., that offered a mixed picture of American corporations. A mixed batch of earnings reports from big-name companies such as Boeing (BA), Caterpillar (CAT) and AT&T (T) also contributed to the choppy trading on Wall Street. A light day on the US economic front also kept traders on the sidelines ahead of the release of reports on weekly jobless claims, durable goods orders and first quarter GDP in the coming days.
Corporate quarterly results remain in focus for markets midweek. More than a fifth of the S&P 500 constituents have reported results, with nearly 80% of those companies producing earnings results that topped street’s consensus estimates, compared with about 65% in the fourth quarter. To be sure, that reflects lowered estimates heading into the quarter amid worries about a recession and anemic growth outside of the US, amplified by a trade spat between Washington and Beijing. Dow Jones Industrial Average declined 59.34 points or 0.22 percent to 26597.05, Nasdaq dropped 18.81 points or 0.23 percent to 8102.02 and S&P 500 was down by 6.43 points or 0.22 percent to 2927.25.
Index closed a day at 11726 with strong gains of 150 points on Wednesday session and formed bullish candle on daily chart. Index has shifted its support to 11680-11635 zone and resistance is coming near 11750-11800 zone, holding above 11700 zone can lead into some more short covering in index. Nifty bank has support near 29650-29500 zone and resistance is coming near 30000-30150 zone.
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