Markets to remain cautious on sluggish global cues

The Indian markets after a choppy session ended with cuts of around a quarter percent in last session, traders remained concerned about the development in parliament where important bills were up for debate. Today, the start is likely to remain cautious on sluggish global cues and traders will once again be eyeing the political developments, as a face-off between the opposition and government over the Goods and Services Tax (GST) bill is likely with the Congress and some other opposition parties insisting that it be sent to the Parliamentary Standing Committee for scrutiny. Though some upmove too can be seen with Bombay High Court’s move to stay the income tax department's decision to impose minimum alternate tax (MAT) on Aberdeen Global Emerging Markets. Traders will also be getting some comfort with an HSBC report that India’s GDP growth is likely to pick up pace and expand by 7.8 percent during this fiscal and higher next year on the back of improved urban consumption. Minister of State for Finance Jayant Sinha too has said that benign oil prices, likely monetary policy easing by the Reserve Bank of India (RBI) and lower inflation will help the Indian economy to grow in the range of 8.1- 8.5 per cent in the current fiscal. There will be some buzz in the oil & gas sector as the international crude prices have surged to their highest in one year.

The US markets ended lower in last session, offsetting the strength witnessed in the previous session. Traders turned cautious about interest rate hike after the release of upbeat service sector data. The ISM said its non-manufacturing index rose to 57.8 in April from 56.5 in March. The Asian markets have mostly made a soft start, though the Chinese market has bounced back after slumping 4.1 percent in last session.

Back home, resuming their southward journey, Indian equity benchmarks ended the session slightly in the red on Tuesday as investors opted to book some of their profit after a huge rally in previous session. In the choppy session of trade, benchmarks after trading in a tight range for first part of the session witnessed sharp selling pressure in the second half and the indices even went on to test important psychological 27,350 (Sensex) and 8,300 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trimmed their losses from thereon as investors continued hunt for fundamentally strong stocks. Sentiments remained down-beat on a private report that the level of optimism about business environment among chief financial officers in the country declined in April-June period largely owing to slower pace of reforms than initially expected and weak profit level of the corporates. Traders were also cautious regarding development in the parliament, where important bills like GST and Real Estate Regulatory Authority Bill will be up for debate. The fall in domestic stocks were partially also on worries that the remaining January-March quarterly earnings may not meet market expectations. Notably, January-March would mark the fourth straight quarter of disappointing results with low signs of on-the-ground revival in the economy since the election of Narendra Modi as Indian Prime Minister in May 2014. On the global front, Asian markets ended mostly in the red, however, European markets made a cautious but positive start. Back home, depreciation in Indian rupee too dampened the sentiments. Meanwhile, selling in infra stocks also weighed on the sentiments with Finance Minister Arun Jaitley scouting bigger engagement of Asian Development Bank (ADB) and saying that in addition to supporting conventional infrastructure projects, deeper engagement on development of Smart Cities, Industrial Corridors, Rail transport and manufacturing is needed. Finally, the BSE Sensex declined by 50.45 points or 0.18% to 27440.14, while the CNX Nifty lost 7.15 points or 0.09% to 8,324.80.