Markets to make a flat-to-positive start on supportive regional cues

The Indian markets despite recovery in final hours could not continue its gaining streak in last session and ended lower by over a quarter percent. Today, the start is likely to be flat-to-positive and some recovery can be seen tailing the bounce back in the regional peers. Now traders will be mainly eyeing the global development of Fed’s action on rate hike, which could take place as early as mid-September. On the domestic front, traders will be eyeing the Services PMI data slated to be announced later in the day. Though there will be some relief for the foreign investors on a report that as per the recommendations of Justice AP Shah-led three-member committee on minimum alternative tax (MAT), foreign investor is not liable to pay MAT prior to April 1, 2015. However, there will be some cautiousness too, with a private survey stating that Indian Consumer Sentiment Indicator fell for the third straight month to 118.6 in July -- the weakest level since March -- amid weakening personal finances. There will be some buzz in the sugar stocks, as the government has asked banks to expedite the release of soft loans to millers to pay cane arrears, which as of now stands over Rs 14,000 crore.

The US markets extended their decline in last session, after a top Federal Reserve official said an interest rate hike is likely in September and traders overlooked report that factory orders rose 1.8 percent, compared with a decline of 1.1 percent in the previous month. The Asian markets have made mostly a green start, though mounting risks of a hike in US interest rates as early as next month was keeping the gains in check.

Back home, Indian equity benchmarks, snapping four days gaining streak, ended the session in red on Tuesday as investors opted to book some of their profits on Reserve Bank of India’s (RBI) status quo stance in its third bi-monthly policy review. Although RBI’s policy stance was much on expected lines where it left its key interest rate unchanged at 7.25%, raising the possibility of a rate cut later in the year. The central bank, however, retained its growth forecast of 7.6% for the financial year ending March 2016, citing a gradually improving outlook on the back of better real income from the decline in commodity prices and likelihood of better agricultural income if the monsoon continues to improve. Sentiments remained dampened after the India Meteorological Department (IMD) said that India’s southwest monsoon in the remaining two months of the four-months season, that is in August and September, is expected to be below normal at 84 per cent of the long-period average (LPA) as El Nino weather conditions have strengthened in the past few month. Traders were also concerned about a report stating that Mutual fund inflow in equity markets dropped by 58% to Rs 4,300 crore in July. Global cues too remained sluggish with European counters making a cautious start and Asian markets ending mostly in red. Back home, Steel stocks remained on buyers’ radar on reports that the government plans to hike import duty on flat and long steel products. Finally, the BSE Sensex declined by 115.13 points or 0.41% to 28071.93, while the CNX Nifty lost 26.15 points or 0.31% to 8516.90.