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Published on 8/04/2019 9:29:12 AM | Source: LKP Securities Ltd

Markets likely to make cautious start of new week - LKP Securities

Posted in Top Stories| #Market Outlook #LKP Securities Ltd

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Domestic Market View

Markets likely to make cautious start of new week

Indian markets recovered from two consecutive sessions of losses and ended higher on Friday supported by upbeat global cues amid hopes of an end to the battle between US and China. Today, the markets are likely to make a cautious start of the new week as investors awaited March-quarter corporate earnings. IT major TCS and Infosys will kick off the March quarter earnings season on April 12 as well as the first phase of general elections will take place later this week. Besides, Industrial Production data for February and CPI Inflation for March will be released on April 12. However, positive global cues are likely to support market sentiment. Traders may take some support with Finance Minister Arun Jaitley’s statement that India is expected to become the third largest economy in the world by 2030 with GDP touching $10 trillion, helped by consumption and investment growth. Currently, the size of the Indian economy is about $2.9 trillion. Talking about avenues of growth for the next 20 years, the finance minister listed infrastructure creation, rural expansion and gender parity, among others. Some support may also come with report that overseas investors have pumped in a net sum of Rs 8,634 crore into the Indian capital markets in the first five trading sessions of April, mainly due to positive market sentiment.

Meanwhile, Commerce and Industry Minister Suresh Prabhu has underlined a need to develop a proper matrix to understand changes in the Indian economy and job creation that is happening at a rapid pace. There will be some buzz in the automobile industry stocks with CRISIL’s report that electric two-wheeler segment is expected to face a rough road in the initial phase of the FAME II Scheme with the exclusion of lead battery-powered such vehicles. There will be some reaction in aviation industry stocks with Civil Aviation Minister Suresh Prabhu’s statement that aviation turbine fuel (ATF) should be brought under the Goods and Services Tax (GST) regime as it will ensure a level playing field for the domestic airline industry. He said input costs should be competitive for any sector and the ministry has been of the strong view that the fuel should be brought under the GST regime.

 

Late flourish helps markets to end higher

Late hour flourish helped the equity markets to end the last trading day of the week on higher note, with Sensex and Nifty reclaiming their crucial psychological levels of 38,800 and 11,650, respectively. Markets made a positive start of the day, aided by Finance Secretary Subhash Chandra Garg’s statement the government is close to meet fiscal deficit target of 3.4% for 2018-19. The government in the interim Budget in February revised upward the fiscal deficit target to 3.4% from 3.3% of Gross Domestic Product (GDP) estimated earlier for the financial year ended March 31. Some optimism also came after the Central Board of Direct Taxes (CBDT) said that it added 1.07 crore new taxpayers in financial year 2018 (FY18) as compared to 86.16 lakh new ITR filers added during financial year 2017 (FY17), showing the positive impact of demonetization. CBDT stated that demonetization had a phenomenal positive impact on the widening of tax base and direct tax collections.

Key indices added gains in last leg of the trade, tracking firm European markets. Trading sentiments got boost as Finance Minister Arun Jaitley said that India’s growth has stabilised between 7-7.5% and irrespective of global trends, domestic consumption is going to increase. He also said that if India can maintain its position as the fastest growing major economy in the world for the next 10 years, it could become a reasonably middle-income economy, reducing poverty to negligible levels. Adding some comfort among investors, Commerce and Industry Minister Suresh Prabhu said that the proposed new industrial policy has been finalised and the new government very soon will announce that. The market participants paid no heed towards reports showing that Fitch Ratings kept India’s sovereign rating unchanged at the lowest investment grade of BBB- with a stable outlook. This is the 13th year in a row that Fitch has rated India at BBB-.

Banking sector stocks remained in focus, amid reports that the RBI said it will hold further discussions with banks on linking interest rates on personal, home, auto and MSME loans with various benchmark rates, a move that would further delay issuance of final guidelines on the issue. Agriculture related stocks remained in limelight with a report stating that India has issued a combined 650,000 tonne import quota for pulses for the fiscal year to March 2020, allowing overseas purchases of protein-rich pulse varieties that are a staple of Indian cuisine.

 

Global Market Overview

Asian markets end mixed on Friday

Asian markets ended mixed on Friday after US President Donald Trump touted prospects for an ‘epic’ trade deal with China, but failed to announce a date and place for a Trump/Xi summit. Chinese state media Xinhua reported quoting Vice Premier Liu He that a new consensus has been reached between the two sides on the text of a trade agreement. Investors also looked ahead to the allimportant US jobs report due later in the day, with traders looking for stabilization in payrolls, following the weakest reading since 2017. Employment is expected to jump by 180,000 jobs in March after inching up by just 20,000 jobs in February. The unemployment rate is expected to hold at 3.8 percent. Japanese markets hit a one-month high, with shares of companies relying on Chinese demand leading the surge on hopes for a US-China trade deal. Investors shrugged off data showing that Japan’s household spending rose less than expected in February and real wages fell unexpectedly. Meanwhile, the markets in Taiwan, China and Hong Kong were closed for the Tomb Sweeping Day holiday

US markets settle higher on Friday on strong job data The US markets settled higher with notable gains on Friday as traders remain energized with better-than-expected job growth in the month of March and progress on the US-China trade front. The Labor Department said non-farm payroll employment jumped by 196,000 jobs in March after edging up by a revised 33,000 jobs in February. Street had expected employment to increase by about 180,000 jobs compared to the uptick of 20,000 jobs originally reported for the previous month. The US unemployment rate remained at 3.8%. However, wage growth expanded 3.2%, below an expected gain of 3.4%. Meanwhile, energy stocks gained, benefiting from a notable increase by the price of crude oil. Housing and utilities stocks also showed strong moves to the upside in the market, while some weakness emerged among tobacco stocks.

Besides, continued indications of progress in US-China trade talks after the latest round of high-level negotiations adding optimism among investors. Chinese Vice Premier Liu He said the two sides have conducted fruitful consultations in the past two days, especially on important issues such as the text of economic and trade agreements. Inventors will be looking ahead to the reports on factory orders, consumer and producer prices, and import and export prices are likely to attract attention next week along with the release of the minutes of the latest Federal Reserve meeting.

Dow Jones Industrial Average jumped 40.36 points or 0.15 percent to 26424.99, Nasdaq surged 46.91 points or 0.59 percent to 7938.69 and S&P 500 was up by 13.35 points or 0.46 percent to 2892.74.

 

Technical View

Index closed a week at 11666 with gain of 42 points and formed a doji candle on weekly chart suggesting indecision in the markets. Now index has support near 11640-11560 zone holding said levels index can move towards fresh highs and resistance for index is coming near 11715-11765 zone. Nifty bank has support near 29900-29800 zone and resistance is coming near30250-30450 zone

 

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