Markets to get a cautious start eyeing the GST Bill passage

The Indian markets lost their momentum in the latter part of the trade and ended mildly in red in the last session. Today, the start of the crucial day is likely to be cautious and all eyes will be on the parliament where the Constitution amendment Bill is scheduled for discussion and voting in Rajya Sabha for roll-out of a uniform goods and services tax (GST) regime. Though, the government and the opposition have reached out at a broad understanding, but the government is likely to come up with fresh proposals over pending Congress demands on the GST Bill to get the opposition party’s support. There will be some buzz in the banking sector stocks on the global rating agency S&P’s report that Indian banks are likely to reduce lending rates further, after having cut base lending rates by 70-90 basis points (bps) in the past few quarters. Though, it also said that banks in India and China will continue to face pressures on their asset quality, profitability, and capitalization over the next 12-24 months. Steel sector too will be in action as though the minimum import prices (MIPs) for steel products will expire on August 5, the domestic primary steelmakers will continue to enjoy protection from imports in the form of anti-dumping duties. There will be lots of important earnings announcements too, to keep markets buzzing.

The US markets were unable to get any respite in the last session and the weakness overseas continued weighing on the markets. Traders largely overlooked the Commerce Department report showing that personal spending increased by slightly more than expected in the month of June. The Asian markets have made mostly a lower start and lots of indices are down by over half a percent, as the oil sell-off continued, reviving concerns over global growth and after Japan’s fiscal stimulus package fell short of expectation.

Back home, Indian the benchmark indices once again showed a lackadaisical performance on Tuesday, as they failed to snap the session in the green territory and settled marginally below the neutral line.  Investors' concerns mounted over the health of global economy after US crude slipped below $40 per barrel for the first time since April, on heightened worries of a crude glut despite peak summer fuel demand.  Besides, Weak trend in global markets coupled with depreciation in rupee value against the US dollar too weighed down sentiments. However, the downside risks for the frontline indices was limited by two sets of data, which were released on Monday, suggesting that India's manufacturing and infrastructure sectors are on a recovery path. While a private survey showed manufacturing activity grew at its fastest pace in four months in July, government data on eight core industries revealed a 5.2% expansion in June, compared with 2.8% in May and 3.1% in the year-earlier month. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers Index edged higher in July, to 51.8 from 51.7 in June, led by higher sales, new orders for consumer goods and exports encouraged by the rupee's depreciation. Meanwhile, FMCG majors like ITC and HUL gained on renewed buying interest ahead of the GST Bill and expectations that rural volume growth may pick up pace on the back of above normal monsoon forecast. Auto majors like Maruti Suzuki continued their uptrend for the second consecutive day after registering strong growth in domestic sales in July on improved consumer sentiment. On the other hand, Sugar stocks like Shree Renuka Sugars and Balrampur Chini Mills came under selling pressure, besides, other commodity stocks also declined on weak global leads. On the global front, Asian markets ended mostly lower on Tuesday, while European stocks too were lower in early trade. Back home, the benchmarks got off to a positive start after sentiments got buttressed by a pick-up in infrastructure sector in June coupled with rising hopes of GST Bill passage this week. The frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices see-sawed around the neutral line though the afternoon session. Finally, the BSE Sensex ended lower by 21.41 points or 0.08% to 27981.71, while the CNX Nifty dropped 13.65 points or 0.16% to 8,622.90.