Markets to make a cautious start, may see some recovery in latter trade

The Indian markets slumping further came very close to breaching their important psychological levels in last session. Apart from the global growth concern, worries emanated from domestic front too, with doubt on passage of the GST Bill in the current session of parliament. Today, the start is likely to be somber tailing the weakness in global markets with Sensex and Nifty may slipping below 25000 and 7600 levels respectively in early trade. Meanwhile, Arvind Subramanian panel report, making a case for the key GST reform has said that India's GDP could receive a boost from just capital goods becoming cheaper once the goods and services tax is rolled out. Markets are likely to see some recovery in the latter part of the trade, supported by the report that indirect tax collection jumped 34.3 percent to Rs 4,38,291 crore during the first eight months of current financial year. There will be some buzz in the realty stocks, as the government has approved 20 changes in the Real Estate (Regulation and Development) Bill including a proposal for insurance of land title to protect buyers and developers from the risk of land fraud. The shipping stocks too may see some action, as the Union Cabinet has cleared a Rs 4,000-crore package to spur India’s ship building industry, combined with a slew of incentives which include the right of first refusal on all government purchases for Indian shipyards, tax incentives and the ‘infrastructure’ status for shipbuilding and ship repair industry. 

The US markets reversing their early gains ended lower in last session, the early strength on Wall Street was partly due to a rebound in oil prices, but as the crude showed a pullback, stocks followed. The Asian markets extending the slump have made another weak start, led by the Japanese market, which is down by over a percent as a resurgent yen weighed on Japanese exporters.

Back home, Indian stock markets went through a tumultuous session on Wednesday as the benchmark indices got bludgeoned by over a percent as crumbling oil prices and data pointing to cooling demand from China sapped investors’ appetite for risk assets. The benchmark indices succumbed to across the board selling pressure and tanked way below their important psychological bastions of 25,100 (Sensex) and 7,650 (Nifty). The markets kept treading southwards through the session in search of a bottom as lingering concerns over GST continued to pummel investors’ morale. Sentiments remained down-beat on fading hopes of passing GST Bill in this winter session after opposition raised their decibel protesting against Delhi High Court summons to Congress leaders Sonia Gandhi and Rahul Gandhi in the National Herald case which led to Parliament getting adjourned yet again. Traders overlooked the government’s statement that the fall in foreign portfolio investments may not have any major macroeconomic impact as long as capital flows are adequate to finance current account deficit. Selling got extended after European counter, after a positive start, entered into red terrain, while Asian markets ended mostly in red. Back home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include metal, healthcare and auto. Stocks related to Pharma space remained under pressure as the Venezuela development continued impacting Glenmark Pharmaceuticals and Dr Reddy's, which have revenues worth $137 million and $50 million, respectively, from that country. The victory of the Opposition party in the National Assembly elections may result in many economic reforms in the country due to a change in the political landscape. Metals following their global counterparts extended their fall despite a report that to curb cheap steel imports from China, Japan and Korea, the government is likely to restrict inward shipments to one port, apart from introducing a floor price for imports. Finally, the BSE Sensex plunged by 274.28 points or 1.08% to 25036.05, while the CNX Nifty dropped by 89.20 points or 1.16% to 7612.50.