Markets to give up some of the last session gains on weak global cues

The Indian markets extended the rally supported by some positive comments and policy decision from the government. Today, the start is likely to be a bit somber and markets may give up some of their last session gains in very early trade on weak global cues. Though, there is a positive news that will support the markets after stabilization, the indirect tax collection growth slowed a bit in August compared to July but remained robust on account of a sharp pick-up in excise duty collection on account of additional revenue measures. Indirect taxes-excise duty, service tax and customs duty - rose 36.7 per cent in August to Rs 54,396 crore over the same month in 2014. The sector specific action still be seen with government’s latest policy announcements. Power sector may see some action with centre approving a policy framework for promotion of off-shore wind power generation. The National Institute of Wind Energy will be the nodal agency for allocation of offshore Wind Energy blocks. Banking too will see some action, as the Deputy RBI Governor S S Mundra has said that the Reserve Bank will issue small finance bank licences in the next few days. Steel stocks will keep buzzing with the Safeguards Directorate recommending the levy for 200 days on hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600mm or more.

The US markets succumbed to selling pressure and ended sharply lower in the last session, as traders seemed reluctant to continue picking up stocks amid a lack of major economic data. The Asian markets have made mostly a lower start with some of the indices suffering cuts of over 2 percent in the early trade after the report of rise in China’s Consumer Prices at fastest pace in a Year, also the producers prices tumbled the most in six years. Japanese market too was suffering profit booking after posting the biggest one day gain since 2008 in last session, as nation’s machinery orders unexpectedly shrank, deflating investors’ appetite for riskier assets.

Back home, extending their previous session’s jubilation, Indian equity benchmarks ended the Wednesday’s trade with a gain of over one and half a percent buoyed by firm global cues coupled with some key policy announcements. Markets, after a gap-up opening, managed to trade firm throughout the session and ended above their crucial 25,700 (Sensex) and 7,800 (Nifty) levels. Sentiments remained up-beat with Chief Economic Advisor Arvind Subramanian’s statement that Indian economy will grow at the highest rate and also remain an attractive investment destination. Traders were also getting some support with Organisation for Economic Cooperation and Development (OECD) statement that India is expected to see “firming growth” while the outlook for China continues to deteriorate. Traders also drew some comfort with Finance minister Arun Jaitley’s statement that it was important to stay on the path of reform and build momentum to achieve higher economic growth and that he still wants to implement a new goods and services tax (GST) by next April 1, though he also said that there will be no extension of the monsoon session and the government has asked the president to prorogue the session. Meanwhile, Prime Minister in a meeting with Indian industry asked them to take risk and invest more, as his government was stepping up investment in infrastructure and improving ease of doing business to attract global investment. On the global front, European counters made a firm start, while the Asian markets extended the rally on Wednesday. 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. Recovery in Indian rupee too supported the sentiments. Buying in metal counter too aided the sentiment after investors' sentiment toward China took a positive turn. Finally, the BSE Sensex surged by 401.71 points or 1.59% to 25719.58, while the CNX Nifty soared by 130.35 points or 1.70% to 7818.60.