Markets to get a positive but cautious start eyeing political developments

The Indian markets losing the early momentum ended lower by over a quarter percent in last session. Today, the start of the crucial new week is likely to be in green, reacting to the report that exports snapped18-month downward spiral and rose by 1.27% in June to $22.28 billion. Rising exports and decline in imports also brought down the trade deficit in June to $ 8.11 billion as against $10.82 billion in the year-ago month. Though, there will be cautiousness too, with the Monsoon session of the Parliament starting from today with key economic bills including the long pending GST Bill to be passed.   Prime Minister Narendra Modi has sought the cooperation of Opposition parties in getting the GST bill passed in the Monsoon Session of Parliament. Meanwhile, the industry body Assocham too has said that government and the main opposition party should get the long-stalled Constitutional Amendment Bill on GST passed in the Rajya Sabha in first few days of the monsoon session of Parliament. The rate sensitives may show some reaction to RBI governor Raghuram Rajan’s statement ahead of his last monetary policy review on August 9, rejecting criticism that the central bank is behind the curve in reducing interest rates. There will be buzz in the telecom stocks, as the telecom department (DoT) has found faults in the Telecom Regulatory Authority of India's (Trai) revised formula to calculate telcos' annual spectrum usage charge (SUC).

There will some important result announcements and reaction to those who reported their earnings over the weekend. Aro Granite, Exide Industries, Hindustan Unilever, MindTree and Gruh Finance, among others will report their numbers.

The US markets made a mixed closing in last session, after failing to sustain an initial upward move in reaction to report from the Commerce Department, showing much stronger than expected retail sales growth in the month of June. The Asian markets have made a mixed start with some indi9ces trading modestly in red, however the Japanese market had extended its lead last week as the yen posted its biggest weekly decline since 2009.

Back home, Indian stocks markets showed a volte-face on the last day of the trading week, as what started on a promising note ended as a dismal show. Earlier the market started the session on positive note tracking firm trade in other regional markets, but sentiments turned pessimistic in late morning session after IT major Infosys posted lower-than-expected dollar revenue growth in the first quarter and lower guidance of constant currency revenue growth in FY 17 to 10.5 percent -12 percent from 11.5 percent -13.5 percent earlier.  Infosys, which declined up to 10 percent intra-day, reported 4.5 percent drop in consolidated net profit at Rs 3,436 crore for the quarter ended June 2016 (Q1FY17) on sequential basis. Selling was also witnessed in TCS, which posted better-than-expected profit and operational performance in April-June quarter. Brexit remained a worry for TCS, given the fact that over 27 per cent of its revenue comes from Europe and 16 per cent from the UK.  Besides, weak trend in European stocks coupled with depreciation in rupee value against the US dollar also weighed on the sentiment. Investors also remained cautious ahead of another major result announcement of Reliance Industries, as the company is expected to report a modest profit growth, while the income is likely to fall marginally, impacted by a planned refinery shut down and lower refining margins. However, auto and FMCG stocks firmed up in an otherwise weak market on expectation of volume growth in wake of above normal monsoon and renewed demand post the implementation of the 7th Pay commission. Banking stocks too edged higher after report that the government is likely to announce capital infusion in public sector banks.  Some support also came with hopes for smooth passage of much-awaited GST bill in the coming monsoon session of the parliament, after Congress leadership accepted the NDA government's invitation for further negotiations and discussion on alternative proposals on capping of the rate. On the global front, Asian markets ended the session on positive note, while European stock markets fell in early trade. Back home, after getting a positive start, the local benchmark indices drifted into the negative zone in mid morning trades and slipped to intraday lows in early noon session post weak opening of European markets. Finally, the BSE Sensex ended lower by 105.61 points or 0.38% to 27836.50, while the CNX Nifty dropped 23.60 points or 0.28% to 8,541.40.