Markets to see some recovery with a positive start

The Indian markets went through bouts of volatility and benchmarks once after losing their momentum found hard to return to the positive territory, ending lower by over half a percent in last session. Today, the start is likely to be flat-to-green and there will be attempts of recovery on value buying at lower levels. Meanwhile, the Confederation of All India Traders (CAIT) has called upon the Prime Minister to convene a special session of Parliament soon to pass the deadlocked GST Bill and has asked parties not to play a “political innings” on the issue. On the same time, former chairman of Tax Administrative Reforms Commission Parthasarathi Shome has said that government should utilise the postponement period to fix transitional issues relating to Goods and Service Tax. There will be some buzz in the gold and jewellary stocks, as the Finance Ministry has hiked the customs tariff value for gold and silver imports into the country. While the tariff value for gold has gone up to Rs 363 per 10 grams from Rs 354 per 10 grams, the tariff value for silver has been increased to Rs 499 per kilogram from Rs 477 per kilogram earlier. There will be some action in the textile stocks too, as the Finance Ministry has imposed definitive anti-dumping duty on ‘flax’ or ‘linen’ fabric imports from China and Hong Kong.

The US markets made a modest bounce back and ended higher in last session, the major averages recovered from the early weakness with the National Association of Home Builders reporting a modest uptick in homebuilder confidence. The Asian markets have made a mixed start and some of the indices including China are modestly in red, even though the National Bureau of Statistics reported that Chinese home prices rose in more cities as housing rebounds.

Back home, Monday turned out to be a disappointing session for the Indian equity indices which got pounded by around half a percent as investors opted to book profits in index heavyweights after sharp gains in the previous session. After a cautious but positive opening, the domestic bourses entered into red terrain to trade choppy throughout the day and ended the session below their crucial support levels of 27,900 (Sensex) and 8,500 (Nifty). Sentiments remained dampened after India's merchandise exports contracted for the eighth month running in July, registering a 10.3 per cent drop over last year. The trade deficit widened to $12.8 billion in July from $10.8 billion in June. Investors also remained disappointed as key goods and services tax bill was not passed in the monsoon session of parliament, which ended last week. Traders’ sentiments also weighed down by the report from the weather department that India's monsoon rainfall deficit has widened to 10% as a strengthening El Nino weather pattern trimmed rainfall. The rainfall is likely to remain subdued even this week over most parts of the country, raising concerns over output from summer-sown crops such as cotton, oilseeds, paddy and pulses. However, benchmarks managed to trim some of their losses in second half of trade as some support came with Prime Minister Narendra Modi promising to continue the war on prices to bring rates further down as a measure to boost economy and provide relief to the common man. Some support also came on report that foreign institutional investors were net buyers to the tune of Rs 404 crore on Friday, as per provisional stock exchange data. On the global front, European counter made a positive opening, however Asian markets ended mostly in red terrain on Monday. Back home, depreciation in Indian rupee too dampened the sentiments. Shares of upstream oil exploration and production (E&P) firms edged lower as global crude oil prices fell. Finally, the BSE Sensex declined by 189.04 points or 0.67% to 27878.27, while the CNX Nifty lost 41.25 points or 0.48% to 8477.30.