Markets to make a cautious start on sluggish global cues

The Indian markets sensed relief in last session with major averages rallying over a percent in the absence of Chinese market trade. Today, the start is likely to be cautious tailing the sluggishness in the global indices and markets may give up some of the gains gathered in last session. However, there will be some encouragement too with Minister of State, UAE stating that United Arab Emirates is keen to invest in India, especially in opportunities arising out of various initiatives announced by the government such as ‘Make in India’ and ‘Digital India.’ Also, the government has received over Rs 1 lakh crore investment proposals for manufacturing in the electronics sector. Rate sensitives will be buzzing with Minister of State for Finance Jayant Sinha’s statement that the Reserve Bank of India will factor in domestic as well as global deflationary trends while deciding policy rates. He has also said that Indian economy could grow close to 8 per cent this fiscal. Meanwhile, exporters body FIEO has said that the decline in outbound shipments has “pulled down” India's GDP growth in the April-June quarter by over 3 percent.

The US markets made a mixed closing, giving up all the early gains in last session, as traders looked ahead to the release of the Labor Department's closely watched monthly jobs report on Friday. The Asian markets have made mostly a negative start, heading for a seventh straight weekly slump, although the Chinese markets are closed, traders were concerned that China will pare back support for its stock market on Monday when it reopens for trade.

Back home, snapping three days losing streak, Indian equity benchmarks staged an enthusiastic performance on Thursday, by rallying over a percentage point and breaking lots of psychological levels in their northward rally. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. Sentiments remained up-beat with the statement of International Monetary Fund (IMF) that near-term growth prospects remain favourable in India but some macroeconomic imbalances still exist. Markets drew some comfort 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.  Some support also came after India's services industry grew for a second month in August, the Nikkei/Markit Services Purchasing Managers' Index rose to 51.8 in August from July’s 50.8. Traders also got some support with CBDT circular asking its fields officers to keep in abeyance pending MAT assessments and not to recover any outstanding demand. Earlier the government accepted the recommendations of an expert committee formed to study MAT to exempt foreign funds from tax on profits earned before April 1, 2015. Meanwhile, weak GDP data, cooling inflation along with mixed PMI data has created room for RBI rate cut which has further lifted the trading sentiments. Buying got intensified after European counters made a positive start, while Asian markets ended in green. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Finally, the BSE Sensex surged by 311.22 points or 1.22% to 25764.78, while the CNX Nifty soared by 106.00 points or 1.37% to 7823.00.