Markets to extend the gains with a positive start

The Indian markets despite volatility extended their gains in last session. Today, the start is likely to be in green on positive global cues and traders will be getting some support with government expressing hope that the Rajya Sabha will clear the indirect tax reform in the first week of August on the back of support from regional parties. The Minister of State for Finance Arjun Ram Meghwal has said that the Congress’ demand for capping the GST rate in Constitution is “not very practical”, but the Government is making a lot of effort to build consensus on the Goods and Services Tax. The IT sector that has been sulking with some weak earnings, is likely to see some recovery with Nasscom, the industry body stating that it didn't see any reason to cut its growth forecast of 10-12 per cent for FY2017 even as big IT firms continued to disappoint in June quarter. The industry body sees no threat to the demand outlook for the industry. There will be some buzz in the food chains and companies engaged in food services on a National Restaurant Association of India (NRAI) report that sound macro-economic performance will in turn help the food services sector become a key part of the economy. Steel stocks too may see some action on report that the government under pressure from exporting countries and Indian small scale industries is planning to prune the list of steel products covered by the Minimum Import Price. There will be lots of earnings reactions too, to keep the markets buzzing.

The US markets ended higher in last session on getting some upbeat earnings from big-name companies such as Microsoft and Morgan Stanley, with Dow and the S&P 500 surging to new record highs. The Asian markets have made mostly a positive start, with some indices rising to 2016 highs tailing positive cue from the US markets and amid signs regional policy makers are preparing to unleash stimulus at a time when corporate earnings are proving more resilient.

Back home, Indian benchmarks carried forward their northbound journey for yet another session on Wednesday, on account of buying in frontline blue chip counters amid firm European cues. Sentiments remained buoyant 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. GST, which aims to simplify indirect tax regime, will be a ‘game-changer’ for the country and its implementation is likely to take place from April next year.  Some support also came with Union Minister Nitin Gadkari’s statement that US companies consider India their next FDI frontier and are keen to pump in billions of dollars into the country's infrastructure and transportation sector. Acknowledging that India's infrastructure sector is lagging behind and it has a long way to go to match the international standards, Gadkari said that the modernization and upgradation of the transport infrastructure has the potential to become driver of the country's growth. However, the upside remained capped with the report that International Monetary Fund trimmed India’s growth forecast for the current and next financial years by 0.1 percentage points as it pared global growth by an identical amount. Weak trend in Asian stocks coupled with depreciation in rupee value against the US dollar too weighed down sentiments. Meanwhile,  telecom stocks like Bharti Airtel and Idea Cellular edged lower after the DoT began 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. On the global front, Asian markets ended in red on Wednesday as investors reassessed the global economy following the International Monetary Bank's global growth cut. Back home, the benchmark got off to an optimistic start, shrugging the sluggish sentiments prevailing in Asian markets. The frontline indices soon gathered momentum and traded with around quarter percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour. Finally, the BSE Sensex surged by 123.54 points or 0.44% to 27911.16, while the CNX Nifty rose by 35.25 points or 0.41% to 8,563.80.