Markets to make a positive but cautious start on mixed global cues

The Indian markets recovering from a choppy trade managed a slightly positive close in last session. Today, the start is likely to be in green and traders will be getting some support with Finance Minister Arun Jaitley urging the Rajya Sabha to pass the GST bill expeditiously to enable states get a share of the Service Tax which is not shared under the provisions of 14th Finance Commission. However, there will be some cautiousness too, with the global lending agency IMF in its latest World Economic Outlook, slightly trimming India’s growth projections to 7.4 percent for 2016 and 2017, a drop of 0.1 percent from its previous forecast, attributing it to a more sluggish investment recovery while declaring Brexit as a “spanner” in the global economic recovery. There will be some buzz in the infra sector, as the highways regulator National Highways Authority of India is planning to bid out 30,000 km of projects over the next 2-3 years, including several greenfield projects. The telecom stocks too will be in action, with department of telecommunications (DoT) starting sending out notices to the country’s top six mobile operators, who have been charged by the Comptroller and Auditor General of under-reporting their adjusted gross revenue by Rs 46,045.75 crore for the period 2006-07 to 2009-10, due to which the government suffered a loss of Rs 12,488.93 crore by way of revenue share licence fee and spectrum usage charge. There will be lots of result reactions too, to keep the markets in buzzing.

The US markets ended mostly in red, though Dow managed to eke out modest gains, setting its fresh all times high. Trading remained subdued and traders seemed reluctant to make significant moves ahead of the release of quarterly results from a slew of big-name companies, even though housing starts jumped 4.8 percent to an annual rate of 1.189 million in June from the revised May estimate of 1.135 million. The Asian markets have made a mixed start and some indices are trading in red, led by the Japanese market which has snapped its long gaining streak, as yen strengthened and oil fell.

Back home, after showing a sluggish trend for most part of the session, Indian benchmarks indices managed to negotiate a close in the green terrain, breaking the two session downtrend, on fresh buying by investors and foreign funds, on hopes of passage of the GST Bill in Rajya Sabha during the monsoon session of Parliament. Sentiments remained buoyant with a report of global financial services major Morgan Stanley, revising upwards its India growth estimate for this year to 7.7 percent from 7.5 percent earlier, because of 'positive surprises' in the macro data. According to it  the growth recovery is becoming more broad-based, driven by public capex, FDI and consumption. Some support also came with Chief economic adviser (CEA) to the finance ministry Arvind Subramanian’s statement that the Indian economy can grow at more than 8 per cent in the next decade, if global economic environment remains supportive.  However, markets participants remained cautious  with the RBI Governor Raghuram Rajan’s statement that  India has a long way to catch up with China on per capita GDP and will need years of strong growth and cautioned against expanding economy at the cost of environment. He also said that the rupee level currently is pretty reasonable and any attempt to devalue it may lead to a surge in inflationary pressures and offset any benefits. According to the RBI governor, the country has come a long way as far as financial inclusion is concerned, but still has a way to go. On the global front, Asian market ended lower on Tuesday, while European stock markets retreated from a three-week high on Tuesday, as disappointing corporate updates soured the investing mood. Back home, after witnessing a subdued trade throughout the morning trade, the key gauges plunged to lowest point in the day in late afternoon session as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Yet, final hour buying ensured that the key indices do not shut shops below neutral line and snap the two session declining streak. Finally, the BSE Sensex gained 40.96 points or 0.15% to 27787.62, while the CNX Nifty rose 19.85 points or 0.23% to 8,528.55.