Markets to make a cautious start on mixed global cues

The Indian markets despite a smart recovery from the day’s low ended modestly lower in last session. Today, the start is likely to remain cautious on mixed global cues, though traders will be opting selective bids ahead of the weekend. Marketmen are likely to get some support with the statement of the group headed by Reserve Bank of India Governor Raghuram Rajan, which is one of the subcommittees of the Financial Stability and Development Council (FSDC) that there was no immediate cause for worry for India from global economic developments and financial volatility, though it has urged to be vigilant. Traders will also be eyeing the movement of the rupee; the government too has said that it is keeping a close watch on the rupee movement and its impact on the country's trade. Companies related to the operations of White label ATMs (WLA) will be in action, as the Union Cabinet chaired by the Prime Minister Narendra Modi, has given its approval to permit Foreign Direct Investment (FDI), up to 100 percent, under the automatic route, in the activity of WLA Operations. There will be some buzz in the telecom stocks, as the Telecom Regulatory Authority of India (TRAI) in October will come out with its final recommendations on compensation that may be paid to mobile phone users by operators for poor service.

The US markets ended higher in the last session despite showing some choppiness, partly offsetting the pullback seen in previous session. Traders reacted positively to the report on initial jobless claims, which fell in line with estimates. The Asian markets have made a mixed start with some of the indices trading lower by around half a percent, paring first weekly advance since July. Japanese market too was trading lower with the nation struggling to gather momentum after a contraction last quarter.

Back home, pressurized by feeble global cues, Indian equity benchmarks ended the Thursday’s session in red terrain. Though, markets staged a smart recovery in latter part of the trade to pare most of their losses. Sentiments remained dampened with FM Arun Jaitley stating that the government is trying to bring the domestic tax system at par with global standards and will list of possible corporate tax exemptions that would be phased out to help a reduction in the rate from 30% to 25%. The statement came even as he said that the government had laid out a clear roadmap and had substantially put the whole idea of retrospective taxation to rest. Investors also remained concerned after the met department said that rainfall is 14% deficient so far and the overall monsoon is likely to be 82% against the earlier estimated 88%, it added that El Nino could be a reason of early monsoon withdrawal. There was some concern in the market with the downgrading of Brazil’s sovereign rating by S&P, though it’s not likely to have any major bearing on India, however, several Indian companies that have significant exposure to the Brazilian market. However, markets got some support with positive indirect tax collection data. 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. Some support also came with NITI Aayog Vice Chairman Arvind Pangaria’s statement that RBI has room to cut interest rate by 0.5-1% and that investment sentiment is turning around. He also said that would not write off the possibility of  8% GDP growth rate this year. Global cues mainly played the spoilsport for domestic markets with European counters witnessing blood bath, while Asian markets ended mostly in red.Back home, depreciation in Indian rupee too dampened the sentiments.Selling in metal space too weighed down sentiments after lacklustre Chinese economic data added to heightened worries about slackening global growth.Finally, the BSE Sensex declined by 97.41 points or 0.38% to 25622.17, while the CNX Nifty lost 30.50 points or 0.39% to 7788.10.