Domestic markets likely to make positive start on firm cues from US markets

Indian equity markets ended higher on Wednesday on account of hectic buying in Reliance Industries, Maruti Suzuki, Bajaj Finance, Titan Company and Kotak Mahindra Bank companies’ stocks. Today, markets are likely to make positive start on firm cues from the US markets overnight. Traders may get some support as Union Finance Minister Nirmala Sitharaman said the government will continue the push on its reforms agenda in its third term since political continuity, along with a predictable and stable economic environment and taxation structure, is important to achieve the laid-down developmental goals. Meanwhile, India should be satisfied with the current growth rate unless the external environment improves, Member of Economic Advisory Council to the PM, Sanjeev Sanyal, said, terming economic expansion in the range of 7 per cent perfectly good. Traders may take note with Chairman of the 16th Finance Commission Arvind Panagariya’s statement that India can realistically push its economic growth close to 9 per cent from the current 7 per cent or so, by implementing a few more reforms in the next five years. There may be some buzz in banking and NBFCs industries related stocks on report that in a relief to banks and non-banking financial companies (NBFCs), the Reserve Bank of India (RBI) relaxed the norms it announced on investments in Alternative Investment Funds (AIFs) in December last year. In a circular issued, the RBI said that its regulated entities (REs) will now be required to make provisioning only to the extent of the amount invested by the AIF scheme in the debtor company and not the entire investment.

Asian markets are trading mixed in early deals on Thursday despite positive cues from the US markets overnight. The US markets ended higher on Wednesday as traders looked to pick up stocks at somewhat reduced levels. 

Back home, Indian equity benchmarks ended Wednesday's trading session on a positive note, backed by strong gains in Capital Goods, Consumer Durables and Industrials stocks. Markets opened gap up and continued to inch higher throughout the day as traders took encouragement with the Reserve Bank of India (RBI) stating that India's current account deficit declined to $10.5 billion or 1.2 per cent of the GDP in October-December quarter of current fiscal from $11.4 billion in the previous three months and $16.8 billion a year back. Some optimism also came with Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that various initiatives from the government and growing investment are going to create more job opportunities during the decade. Sentiments remained up-beat in afternoon deals, taking support from Engineering Export Promotion Council (EEPC) of India’s statement that India's engineering exports to Russia doubled to $1.22 billion till February during the 2023-24 fiscal. It said the shipments to the country stood at $616.68 million in the previous fiscal. Some solace came as S&P Global Ratings stated that India's financial system regulator, the RBI, is showing serious commitment to improving governance and transparency in the sector. The recent measures by the RBI will curtail lenders' over-exuberance, enhance compliance culture, and safeguard customers, but the drawback will be higher capital costs for institutions. Traders also took a note of Fitch Ratings’ report that the profitability of Indian banks is likely to continue to improve, although net interest margin (NIM) compression will limit earnings upside over the medium term. It also said banks’ rising funding costs are likely to remain an important factor driving NIMs, but it is expected that earnings will be resilient despite the sector’s dependence on net interest income, which contributed 75 per cent of total operating income in the first nine months of the financial year ending March 2024. Finally, the BSE Sensex rose 526.01 points or 0.73% to 72,996.31 and the CNX Nifty was up by 118.95 points or 0.54% to 22,123.65.