Markets to see some recovery with a positive start

The Indian markets lost some ground in last session, giving up some of their gains from the recent rally. Today, the start is likely to be in green and some recovery can be seen on supportive global cues. Traders will be getting some support with Central Board of Excise and Customs statement that GST can be implemented anytime during a year and not only the beginning of a financial year. GST, once rolled out, will subsume various levies like excise, service tax, sales tax, octroi, etc. However, there will be some cautiousness too, as the India Ratings has said that as the base effect wanes, CPI inflation will go up and WPI deflation will come down from the current levels in September. Meanwhile, there will be some buzz in the market with Vodafone India winning its battle against the income-tax department over transfer pricing in the Bombay High Court, which set aside the appellate tribunal’s ruling that had gone against the telecom company. Realty and banking stocks are likely to be in limelight, as the Reserve Bank of India (RBI) has said that banks can provide home loans up to 90% for properties that cost up to Rs 30 lakh. Earlier, the facility was available only for properties that cost up to Rs 20 lakh.

The US markets ended higher in reaction to the minutes of the latest Federal Reserve meeting, which further offset recent uncertainty about the outlook for interest rates. Also, the Labor Department released a report showing a bigger than expected pullback in initial jobless claims. The Asian markets have made a positive start, as investors piled back into riskier assets amid speculation the Federal Reserve won’t be raising interest rates soon.

Back home, snapping six days winning streak, Indian equity benchmarks ended the session in the red terrain on Thursday as investors opted to book profit at higher levels. After a cautious opening, the domestic bourses never looked in recovery mood and ended the trade with a cut of over half a percent, breaching their crucial 8,150 (Nifty) and 26,850 (Sensex) levels. Selling was both brutal and wide-based as, barring consumer durables and metal; none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included FMCG, healthcare and oil and gas. Sentiments remained downbeat after a Crisil Research report said that for the fifth consecutive quarter, India Inc is expected to report single-digit growth in revenues. This is mainly because of fragile consumption demand, especially in the rural areas, weakness in investment-linked sectors, and the meltdown in global commodity prices. Traders also remained concerned after IMF said that China’s slowdown has repercussions on the global economy, but the impact will be greater in countries that have greater trade exposures with the world’s second-largest economy. On the global front, the European markets made a soft start, while Asian markets ended mostly in red. Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 65.10 per dollar at the time of equity markets closing compared with its previous close of 64.95. Sentiments were also weighed down on report that foreign investors sold shares worth Rs 50.60 crore on Wednesday as per provisional data. Selling in defensive sectors like FMCG and Pharma too dampened sentiments on account of profit-booking after witnessing decent buying demand recently. The banking stocks too remained under pressure and witnessed profit taking, as the simultaneously released Global Financial Stability Report (GFSR) noted the downturn in India's credit cycle and the rise in stressed loans. Finally, the BSE Sensex declined by 190.04 points or 0.70% to 26845.81, while the CNX Nifty lost 48.05 points or 0.59% to 8129.35.