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Domestic Market View
Markets to open slightly in green; TCS result eyed
Indian markets extended their gains for fourth straight session and ended higher on Wednesday tracking strength in global peers on rising hopes that the US and China would strike a deal to end their trade tiff. Today, the start is likely to be marginally in green amid positive trade on Wall Street. Traders will be looking for third-quarter corporate earnings for the financial year 2018-2019, with Tata Consultancy services (TCS) reporting quarterly results today. The company is expected to continue to deliver healthy earnings in October-December quarter though furloughs could impact some growth.
Traders will be getting encouragement with PwC-Ficci survey showing that India Inc expects over seven percent growth in the next 12 months on the back of a number of policy initiatives taken by the government. As per the report, The Indian economy is likely to grow at an average rate of 7% or more in the coming year. It added that India Inc is upbeat about the future of the economy as growth is to be driven by strong domestic demand and an increased focus on export markets. Also, there will be some support with Finance Minister Arun Jaitley’s statement that the government’s electric mobility programme will promote manufacturing and job creation, besides reducing pollution. Besides, a private report stated that India is likely to become the world’s second-largest economy by 2030, next only to China and overtaking the US. Traders may take note of a report that NITI Aayog Vice Chairman Rajiv Kumar made a case for adopting a middle path with regard to data protection, saying data nationalism may be the antithesis of global growth. Meanwhile, Commerce minister Suresh Prabhu urged the finance ministry to make the process of refund of GST input tax credit online. However, there may be some cautiousness in the markets amid weak Asian peers as the markets awaited more clarity on US-China trade talks that raised hopes of a deal to avert an all-out trade war.
Last hour rally helps markets to end near intraday highs
Last hour rally helped Indian equity benchmarks to close Wednesday’s trading session with strong gains. After a firm start, the key indices remained upbeat for the most part of the session, as the World Bank forecasted that Indian economy is expected to grow at 7.3% in the current fiscal year 2018-19 (FY19) and will grow further at average 7.5% in the following two years. It also said that India registered quite a bit of pick up in doing business ranking. Adding some optimism, the finance ministry said that the recovery of evaded indirect taxes shot up in 2018-19, after a low in 2017-18, the year when the goods and services tax (GST) was implemented. Recovery as a percentage of the evaded taxes dropped from 26% in 2016-17 to 14% in 2017-18. Then, it went up to 29% in 2018-19 (April to December period). Some support also came with a report stating that the central government has released Rs 48,202 crore as GST compensation to states during April-November 2018, higher than the Rs 48,178 crore paid in the previous financial year.
However, in last hour of trade markets witnessed volatility with key gauges reversing all of their gains to enter into red terrain for brief period of time, as sentiments got hurt with a private reports stating that the battered Indian rupee will take another bruising this year, despite a recent revival, weighed down by uncertainty around national elections in May and an expected economic slowdown. Some anxiety came on the street, with the World Bank’s report showing that the growth of the global economy is expected to slow to 2.9 percent in 2019 compared with 3 percent in 2018, citing elevated trade tensions and international trade moderation. But soon, the markets regained momentum to end the session near day’s high points, tracking firm European markets. The rally also buoyed with the World Economic Forum report stating that India is poised to become the thirdlargest consumer market behind only the US and China; and consumer spending in India is expected to grow from $1.5 trillion at present to nearly $6 trillion by 2030.
Jewellery stocks ended mixed, amid Gem and Jewellery Domestic Council (GJC) report stating that the gold jewellery industry in the country has not witnessed any significant growth in the last two years, particularly after demonetisation and GST, while stocks related to power sector ended lower, despite report that power plants across the country generated 1,047.3 billion units (BU) of electricity in April-December, 2018, registering a 6.7% year-on-year (y-o-y) growth. Further, airline stocks remained in focus with civil aviation secretary R N Choubey’s statement that India will issue new safety protocols for airlines operating Airbus A320neo aircraft fitted with Pratt & Whitney engines, while textile sector stocks remained in limelight with Confederation of Indian Textile Industry (CITI) stating that the stressed advance ratio of the textile sub-sector has been improving continuously. As per Reserve Bank of India’s (RBI) financial stability report, the ratio has improved from 23.70% in September 2017 to 18.70% in September 2018.
Global Market Overview
Asian markets end mostly higher on progressing trade talks
Asian markets ended mostly higher on Wednesday, buoyed by optimism that trade talks between the United States and China are progressing. With talks getting extended to Wednesday and US President Donald Trump saying in a tweet that discussions between the world's two largest economies were ‘going very well’, investors are optimistic that a trade deal can be struck ahead of a March 1 deadline established by Trump and Chinese President Xi Jinping last month at the G-20 summit in Argentina. Beijing approved the import of five genetically modified crops on Tuesday, the first in about 18 months in a bid to boost its purchases of US grains.
US markets end higher on easing fears around US-China trade
Magnifying their gains for fourth straight day, the US markets ended higher on Wednesday on the back of optimism about a potential trade deal between the US and China after talks between US and Chinese officials were extended to a third day. Officials have not made public comments about the outcome of the talks, although traders remain hopeful the US and China will reach a long-term trade agreement before a March 01 deadline. Markets also remained positive after the minutes of the latest Federal Reserve meeting confirmed Fed Chairman Jerome Powell's recent remarks suggesting the central bank will take a patient approach to further interest rate increases. The minutes of the Fed's December meeting said participants saw the appropriate extent and timing of future rate hikes as less clear than earlier.
The Fed decided to raise rates by a quarter point at the meeting, but the minutes suggest volatility in financial markets and increased concerns about global economic growth have clouded the outlook for rates. The minutes said ‘against this backdrop, many participants expressed the view that, especially in an environment of muted inflation pressures, the Committee could afford to be patient about further policy firming.’
Dow Jones Industrial Average rose 91.67 points or 0.39 percent to 23879.12, Nasdaq gained 60.08 points or 0.87 percent to 6957.08 and S&P 500 was up by 10.55 points or 0.41 percent to 2584.96.
Index closed a day at 10855 with gains of 53 points after a volatile session on Wednesday and formed pin bar kind of candle pattern on daily chart which suggest indecision in the markets. Still index has strong resistance near 10900-10960 zone and support for index is coming near 10800-10750 zone. Nifty bank has support near 27650-27500 and resistance is near 27820-27950 zone..
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