Markets to get a bounce back on positive global cues

The Indian markets extending their fall for the third straight session, ended at over six months low in last session. The capitulation continued for most part of the day however there was some last hour bounce back, indicating a bottoming out slump. Today, the start is likely to be mildly in green on positive global cues and a bounce back can be expected after the continuous sell-off. Traders will be getting some respite with Finance Minister Arun Jaitley announcing a high level committee, which will give its first recommendations on the issue of imposition of MAT on foreign investors. The committee would also look into few other tax issues, which are essentially legacy issues. However, traders will be reacting to the earnings and will be keeping a close eye on the movement of rupee, which slipped to its 20 months low in last session. Meanwhile, India is proposing to set up an independent debt management office in a phased manner and will begin discussions with the Reserve Bank of India (RBI) on its contours after the completion of the ongoing budget session. There will be some buzz in the coal and mineral stocks, as an inter-ministerial panel has asked the Coal Controller to re-calculate the bank guarantee to be deducted in the case of those prior mine allottees that have delayed production of blocks and have filed court cases against the show-cause notices issued to them.

The US markets recovered from their declining streak and managed a close in green in last session, ahead of the monthly jobs report on bargain hunting, following the recent pullback. Although, there was slight rebound in initial jobless claims in the week ended May 2nd. The Asian markets have mostly made a positive start, as investors’ awaited US labor data.

Back home, extending southward journey for third straight session, Indian equity benchmarks ended the sluggish day of trade near 6-month low with a cut of around half a percent on persistent selling by foreign institutional investors as concerns regarding MAT continue to float around. After a cautious start markets started losing traction and entered into red terrain in noon deals as traders were cautiously looking for the passing of the goods and services tax (GST) Bill in Rajya Sabha, where the ruling coalition of Prime Minister Narendra Modi is in a minority in the upper house of Parliament, which must endorse the bill with a two-thirds majority. Meanwhile, Finance ministers from 15 states were meeting today to discuss the next steps for a common GST, a day after Parliament’s lower house, the Lok Sabha, passed the much-awaited legislation to introduce the proposed tax system. Depreciation in Indian rupee too dampened the sentiments. The rupee, which has been under pressure in last few sessions, slid further to breach Rs 64 to US dollar mark on sustained capital outflows. Rupee was trading at 64.21 per dollar at the time of equity markets closing compared with its previous close of 63.54 per dollar. The sentiments were also impacted by the continuous rise in international crude prices which will have bearing on the inflation in coming times. Weak opening in European counters too dampened the sentiments, while Asian markets too edged lower. Back home, sentiments remained dampened on reports that foreign institutional investors sold shares worth a net 16.99 billion rupees ($265.80 million) on Wednesday, adding to their $360.88 million selloff in the previous session. Overseas investors have been net sellers this month with a net outflow of $693.8 million. Meanwhile, banking shares continued to be under pressure, with the Bank Nifty hitting five-month lows, on the back of heavy selling by overseas investors. Finally, the BSE Sensex dropped by 118.26 points or 0.44% to 26599.11, while the CNX Nifty declined by 39.70 points or 0.49% to 8,057.30.