Markets to make a cautious start, may move higher in latter trade on good macro data

The Indian markets extending their fall slipped below the crucial levels in last session, impacted by China’s move to devalue the yuan for the second straight day coupled with domestic political jitters. Today, the start is likely to remain cautious as the Rajya Sabha failed to take up GST bill on the penultimate day and it looks almost impossible for the government to clear Goods and Services Tax (GST) bill on the final day of the Monsoon session of parliament. Though, some recovery can be expected in the latter part of the trade supported by some upbeat macro data. Retail inflation fell to a record low of 3.78 percent in July and industrial production hit a 4-month high of 3.8 percent in June, the development will add to the clamour for interest rate cut by RBI and rate sensitives will be in action. Finance Minister Arun Jaitey has said that the government is committed to pursuing subsidy reforms by efficient targeting of subsidies to the poor and needy while saving the 'scarce financial resources' for infrastructure and development needs. There will be some buzz in the sugar stocks, as the government eased norms for sugar mills to borrow soft loans of Rs 6,000 crore to help clear arrears of Rs 15,400 crore to sugarcane growers. The IT stocks too will remain in jubilant mood, as amid concerns being raised by Indian firms over American visa regime, the US said it provides maximum number of visas to Indians than any other country in the world.

The US markets coming off their days’ low managed a flat closing in last session on bargain hunting, with the Dow rebounding after falling to a six-month intraday low. The Asian markets have bounced back and some of the indices are trading higher by over a percent, with regional currencies stabilizing after the biggest two-day selloff in four years as the yuan’s tumble eased.

Back home, extending their southward journey to fourth straight session, Indian equity benchmarks ended the Wednesday’s trade with a cut of over a percent. Sentiments remained down beat since morning as the domestic bourses, after a negative start, never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 27,600 (Sensex) and 8,400 (Nifty). Sentiment was hit as China allowed the yuan to fall sharply for a second straight day, forcing investors to seek refuge in safe-haven government debt. Investors also remained worried ongoing logjam in the parliament over the GST Bill. Traders are of view that if the GST Bill is not cleared in the monsoon session then market could fall further. Marketmen also remained on sidelines ahead of the June Index of Industrial Production (IIP) and July Consumer Price Index (CPI) numbers, scheduled to be announced later in the day. Moreover, investors failed to get any sense of relief from report that the government is planning to raise import duty on base metals including iron and steel by 2.5% to protect the domestic industry from Chinese deluge. Traders also overlooked reports that indirect tax revenue jumped over 37 per cent to over Rs 2.1 lakh crore in April-July of the current fiscal on the back of higher excise duty mop-up. Global cues too remained sluggish with European counters making a soft start, while all the Asian markets ended in red. Back home, depreciation in Indian rupee too dampened the sentiments. Metal companies declined for the second straight day post the Chinese central bank's decision to devalue its tightly controlled currency as a devalued currency will make Chinese exports cheaper. Finally, the BSE Sensex plunged by 353.83 points or 1.27% to 27512.26, while the CNX Nifty declined by 112.90 points or 1.33% to 8349.45.