Markets to make another recovery attempt with a positive start

The Indian markets giving up early recovery attempt, snapped the volatile last session with cut of around a percent, as selling intensified in last hour. Today, the start is likely to be modestly in green and some recovery can be expected today, with traders taking some encouragement with chief economic adviser at the finance ministry Arvind Subramanian’s comments that the Indian economy is still expected to grow around 8 percent in the fiscal year to March 2016, after economic growth slowed to 7 percent in the quarter to June. International Monetary Fund (IMF) too has said that near-term growth prospects remain favourable in India but some macroeconomic imbalances still exist. The Infra stocks are likely to witness some action, as Road Transport and Highways Minister Nitin Gadkari has said that the government is committed to adding about 50,000 km of National Highways by the year end to take their length to 1.5 lakh km to transform the face of India's infrastructure. The aviation stocks are likely to come under pressure on report that the Civil Aviation Ministry is working on options to address the issue of airlines charging high fares, especially during festive seasons.

The US markets bounced back in last session and rallied close to two percent on short covering and reacting positively to the latest batch of economic news. Payroll processor ADP reported a notable increase in private sector employment during the month of August. Labor productivity too jumped by much more than previously estimated in the second quarter. The Asian markets have made mostly a positive start taking cues from the US markets, while the closed China and Hong Kong market for WWII anniversary too has provided some calm.

Back home, extending their southward journey for third straight session, Indian equity benchmarks ended the Wednesday’s session with a cut of around a percent, breaching their crucial 25,500 (Sensex) and 7,750 (Nifty) levels. Sentiments remained dampened on account of weak GDP data coupled with worries on China’s economic slowdown amid fears of an interest rate hike by the US fed has triggered a fresh round of selling across the global markets. Earlier, markets made a firm start as the government accepted the recommendation of the Shah Panel report stating that Minimum Alternate Tax (MAT) should not be imposed on overseas portfolio investors retrospectively. However, traders booked profit at higher levels and markets lost the plot completely in the second half and there was hardly any serious attempt to move back in green. Concern in the market grew after India's weather office India Meteorological Department (IMD) said that for the country as a whole, cumulative rainfall during this year's monsoon season was 12% below the Long Period Average (LPA) until 1 September 2015. Weakness in Indian rupee too weighed down the sentiment. Sentiments also remained dampened on report that foreign portfolio investors (FPIs) remained net sellers in domestic equities worth Rs 675.32 crore on Tuesday, as per provisional data released by the stock exchanges. On the global front, European counters traded on a cautious note, while Asian shares fell for a third straight day. Back home, markets took the turn for worst in last leg of trade and slipped to their day’s low, with Nifty touching its lowest level since August 25. Selling in banking stocks too played spoil sport as Fitch Ratings said that RBI declaring only ICICI Bank and SBI as Domestic Systemically Important Banks (DSIBs) reflects in part some of the broader capital challenges in India. Finally, the BSE Sensex plunged by 242.88 points or 0.95% to 25453.56, while the CNX Nifty declined by 68.85 points or 0.88% to 7717.00.