Markets to get a cautious-to-positive start on mixed global cues

The Indian markets recovered from the lows of the day and ended flat in last session, ahead of key central bank meetings later in the week. There was some concern with delayed monsoon and rise in WPI inflation. Today, the start is likely to be cautious on mixed global cues, but some recovery can be expected once after the markets stabilize. Traders will be getting some support with Finance Minister Arun Jaitley’s statement after a meeting of Empowered Committee of state FMs on the long awaited indirect tax reform that every state has either supported or accepted the idea of the pan-India Goods and Services Tax (GST) except Tamil Nadu. GST Empowered Committee Chairman Amit Mitra too has said that there was “general consensus” on the issue of dual control over taxation structure between the Centre and states. However, there will be some concern in the markets too, with the World Bank report that India recorded a 10-year low in investments in public-private sector in the year 2015, adding to contraction that pulled down the global investment to below its five-year average of $ 124.1 billion. There will be some buzz in the PSU oil marketing companies, as the global crude prices have fallen to their three weeks low.

The US markets continuing their southbound journey fell again in last session, as traders expressed some trepidation ahead of the Federal Reserve's monetary policy announcement on Wednesday; however the major averages came off the worst levels of the day by the end. The Asian markets have made a mixed start with some indices still trading in red on anxiety over Britain’s potential exit from the European Union. Chinese markets have recovered after falling in early trade after MSCI Inc. kept its securities out of its benchmark indexes.

Back home, it was a lackadaisical show from the benchmark indices on Tuesday, as they failed to snap the session in the green territory and settled marginally below the neutral line. The session was characterized by extreme volatility as the frontline indices went through a rollercoaster ride amid lack of direction and a pandemonium across global equity markets. On the domestic front, sentiments got undermined after Consumer Price Index (CPI) for May 2016 rose to 5.76%, for a second straight month, compared with 5.39% in April, weakening prospects of a rate hike by RBI in August 2016.  The central bank closely watches the CPI figures to set the interest rate policy. In its June monetary policy review, RBI had said the possibility of another rate cut later this year would arise if monsoon rains dampen upward pressure on food prices. However, investors got some confidence with Union Finance Minister Arun Jaitely’s statement that the Goods and Services Tax (GST), which aims to bring the country under a unified tax regime and has been stalled by a stalemate for years, has finally earned the support of virtually all states except Tamil Nadu. The union minister met finance ministers of 22 states and representatives from seven others in Kolkata in hopes of fostering a consensus on the contentious Bill. Post his meeting, Jaitley said that he is hoping to roll out GST by April 1, 2017. The news came as a string of hope for Indian market, which helped the indices to recover from day’s low. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 212.24 crore on June 13, 2016. Globally, Asian marked ended mostly in red, while the European stock markets got off to a gap down beginning. Earlier on Dalal Street, the benchmark got off to a flat start with a positive bias shrugging weak cues from the Asian markets, where sentiments largely remained influenced by Wall Street which fell for a third straight session. However, the frontline gauges managed to pare the losses and rise above the neutral line in the dying hours of trade and settled in close proximity with previous closing levels. Finally, the BSE Sensex ended lower by 1.06 points to 26395.71, while the CNX Nifty dropped 1.75 points or 0.02% to 8,108.85.