Markets to get a cautious start on sluggish global cues

The Indian markets losing their early momentum ended flat with a negative bias in the last session. The optimism over passage of the GST Bill in Parliament was overshadowed by some earnings disappointments. Today, the start is likely to be cautious on sluggish global cues. However, in the latter part of the trade some recovery and upmoves can be seen, with the government listing the Goods and Services Tax (GST) Bill in the Rajya Sabha for consideration and passage on Wednesday. Parliamentary Affairs Minister Ananth Kumar has said that the GST bill has been listed for discussion in the Rajya Sabha on Wednesday and hoped it will be passed through consensus. Traders will also be getting some support with India's core sector expanding 5.2 per cent in June compared with a 2.8 per cent rise in May and 3.1 per cent in the year ago period. The growth was the fastest in two months riding on double digit growth in the cement and coal sector. The banking and steel sector stocks will keep buzzing with report that the steel industry has outstanding loans of around Rs 3 lakh crore in various banks, thus making the sector one of the largest contributors to non-performing assets (NPA) in the country. Also, as the Reserve Bank of India (RBI) has issued new licensing guidelines that seek to encourage non-banking finance companies (NBFCs) to turn themselves into full-fledged banks. Sugar stocks too may remain in action on latest estimates of ISMA that the country's annual sugar output may fall short by 8 per cent. There will be lots of important earnings announcements too, to keep the markets buzzing.

The US markets continued their consolidation run and made another mixed closing in last session, with the major averages bouncing back and forth the neutral line, and traders remained reluctant to make any significant moves ahead of some key events later this week. The Asian markets have made mostly a lower start and some of the indices are even down by around half a percent, as the oil dropped further. The Japanese market was leading the losers pack ahead of details on the government’s fiscal stimulus plans.

Back home, Indian benchmark indices showed a volte-face on the first day of a new trading week as what started on a promising note ended as a gloomy show. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted in to the negative territory for second consecutive session despite getting off to a gap-up opening.  Marketmen were optimistic in early part of the session, as the government is going to table the Constitutional Amendment Bill for introduction of GST in Rajya Sabha for consideration and passage this week. The proposed tax reform, the biggest since India's independence from Britain in 1947, seeks to replace a slew of federal taxes and levies in 29 states, transforming the nation of near 1.3 billion people into a customs union. Sentiments got further support with the report that manufacturing activities gathered pace slightly in July compared to the previous month to post a four-month high expansion, on high demand from both domestic and external markets. The widely-tracked Nikkei purchasing managers' index (PMI) inched up to 51.8 points in July against 51.7 in the previous month, indicating a further improvement in overall business conditions across the sector. However, the sanguinity in local markets was under check as profit booking in Capital Goods and rate sensitive Banking counters exerted downside pressure on the frontline indices and dragged them below to the psychological 8,650 (Nifty) and 28,100 (Sensex) levels.  Banking stocks declined on account of sharp selloff in ICICI Bank amid weak June quarter results. ICICI Bank reported a 22 percent year-on-year (YoY) fall in its consolidated net profit at Rs 2515.85 crore in the June quarter, compared with Rs 3232.37 crore in the same period a year ago. However, good buying was observed in auto stocks post better July sales numbers by many large automakers. On the global front, Asian markets ended mostly in green, while European stocks edged lower in early trade. Back home, the benchmark got off to a rollicking opening as investors rejoiced after the government listed the much-awaited GST Bill for consideration and passage in Rajya Sabha’s agenda for this week. But the optimism soon started showing signs of easing in late hours of trade and profit booking in few sectors, while drifting European markets too weighed down the local bourses by the end of session. Finally, the BSE Sensex declined by 48.74  points or 0.17% to 28003.12, while the CNX Nifty lost 1.95 points or 0.02% to 8,636.55.