Markets to make a good gap-up start on GST Bill passage

The Indian markets suffered sharp cuts in last session and the major averages lost over a percent on profit taking ahead of the crucial decision on long pending GST Bill. Today, the start is likely to be jubilant and markets will see good recovery with a gap-up start, as in the biggest tax reform since Independence, the national sales tax or GST Bill has been approved by the Rajya Sabha to replace a raft of different state and local taxes with a single unified value added tax system. Finance Minister Arun Jaitley has said that manufacturing taxes and VAT will come down with the new national sales tax but the same for services tax will be decided by states and centre. Meanwhile, the Union Cabinet has approved the Motor Vehicle (Amendment) Bill, 2016, providing for hefty penalties for violation of road safety rules. There will be some buzz in the telecom stocks, as the cabinet has approved the weighted average spectrum usage charge (SUC) at a minimum of 3 per cent of annual revenue, clearing the stage for holding the largest ever auction in September this year. The oil & gas stocks too will be in action, as the Petroleum Minister Dharmendra Pradhan has asked Finance Ministry to cut cess on domestically produced crude oil to 10-12 percent from current 20 percent to provide relief to producers hit by slump in prices.

There will be lots important earnings announcements to keep the markets buzzing.Tata Power, Siemens, Arvind, Gati, Monsanto India, Thomas Cook, Taj GVK and Orient Paper are among many to announce their numbers today.

The US markets made modest recovery in the last session and the Dow snapped its seven days losing streak, led by the gains in energy stocks after the crude prices bounced back. Though, traders were concerned with mixed batch of economic reports and seemed somewhat reluctant to make more significant moves. The Asian markets have made a mixed start and some of the indices are marginally in red, though others are moving higher driven by mining and energy shares.

Back home, Indian benchmarks indices extended the sorrow of closing in the red territory for the fourth consecutive session on Wednesday, as worries over global economic growth prospects prompted marketmen to take profits off the table. Sentiments also remained dampened with a private report stating that consumer confidence in India declined in the second quarter this year with concerns over fuel prices and rising inflation, making the country lose the top position it occupied for the last two years as the most confident globally, adding some pessimism on the street. Besides, India's consumer goods market slowed in the June quarter from the year earlier, indicating that buyers are still being careful about discretionary spending as they wait for more concrete signs of an economic recovery, also weighing on the sentiments. Investors failed to drew any comfort with a private survey showing India’s services sector expanded at the fastest pace in the three months ended July, backed by a strong inflow of business amid strong underlying demand conditions. The Nikkei India Services Business Activity Index, which tracks changes in activity at service companies on a monthly basis, increased to 51.9 in July, up from 50.3 in June. Further, market participants were awaiting the outcome on the Goods and Services Tax (GST) constitutional amendment bill in Parliament, amidst strong indications that the most far-reaching taxation reform would be supported by Congress and all other major political parties. Meanwhile, Steel counters gained traction on the report that India is expected to impose an anti-dumping duty of up to $557 per tonne on imports of certain steel products from six countries, including China, Japan and Korea. On the flip side, banking stocks came under pressure on the global rating agency S&P’s report that banks in India and China will continue to face pressures on their asset quality, profitability, and capitalization over the next 12-24 months. On the global front, Asian stock markets ended mostly lower, while the European stocks too edged lower in the early deals. Back home, the local benchmark got off to a somber opening, extending the downtrend for the fourth straight session as pessimistic sentiments prevailed across Asian markets. The selling pressure accentuated in the mid morning trades as investors took to across the board risk aversion. Finally, the BSE Sensex ended lower by 284.20 points or 1.02% to 27697.51, while the CNX Nifty dropped 78.05 points or 0.91% to 8,544.85.