Markets likely to get a cautious but positive start

The Indian markets suffered cut of over a quarter percent in the last session, after losing momentum in the second half of the trade and snapped their three days gaining streak. Today, the start is likely to remain cautious, though after initial consolidation some upmove too can be seen. Traders will be getting some encouragement with reports that India's direct tax collection for the June quarter of FY2017 grew 24 per cent, while indirect tax collection was up by 30 per cent. The collection up to July indicates that 18.82 per cent of the Annual Budget target of direct taxes has been achieved in the first four months of the fiscal. Meanwhile, RBI’s outgoing Governor Raghuram Rajan, dispelling fears of price rise due to the rollout of Goods and Services Tax has said that it will be challenging to roll out GST from April 1, 2017 but the new indirect tax regime will eventually boost business sentiment and investments. There will be buzz in the steel stocks, as the government has slapped anti-dumping duty on import of hot-rolled steel products from six nations, including China and South Korea, in a bid to shield domestic manufacturers against cheaper inward shipments. The banking stocks too will be in action, with the Rajya Sabha passing a Bill that amends four different Acts to expedite disposal of debt recovery applications, and complementing the Insolvency and Bankruptcy Code passed by Parliament in May.

There will be lots of important earnings announcements to keep the markets buzzing. M&M, Adani Enterprises, Adani Transmission, Indiabulls Realty, Chambal Fertiliser, Corporation Bank, Punj Lloyd, Finolex Cables and Thermax are among many to announce their numbers today.

The US markets managed a modestly higher close in last session, though the trade remained lackluster, as traders looked ahead to the release of reports on retail sale and producer prices on Friday. The Asian markets have made a mostly a lower start, with some indices showing cut of quarter to half a percent in early deals, as oil held declines, though the Chinese market was in green, on speculation the Federal Reserve will be slow to raise interest rates amid uneven global growth.

Back home, Indian benchmark indices staged a disappointing performance in Tuesday's volatile session of trade, erasing almost all the gains accumulated in the previous session. Marketmen, remained on sidelines after the Reserve Bank of India (RBI) at its policy meet kept key policy rates unchanged and retained FY17 GDP growth forecast at 7.6 percent. Inflation at a two-year high prevented Rajan from cutting interest rates at his final policy review.  Going forward, RBI indicated that the full implementation of the recommendations of the 7th central pay commission (CPC) on allowances will affect the magnitude of the direct effect of house rents on the retail inflation. RBI also noted that prices of pulses and cereals are rising and services inflation remains somewhat sticky. However, the central bank kept a positive outlook on the economy saying abundant monsoon will help in the recovery. Indian monsoon has been more than plenty this year, leading to better sowing averages. Promises of a better harvest also mean that food inflation could come down in the coming months, creating some space for his successor to cut rates later in the year. Further, dispelling fears of price rise due to the rollout of Goods and Services Tax, Raghuram Rajan said its impact could be assessed only after the GST rate is decided and inflation could be short-lived as seen in many other countries.  He further added that it will be challenging to roll out GST from April 1, 2017, but the new indirect tax regime will eventually boost business sentiment and investments. Meanwhile, local sentiments were also hurt by the private report that indicated consumer sentiment waned in July this year due to decreasing optimism towards personal finances, business environment, employment and the real estate market.  The MNI India Consumer Sentiment Indicator decreased 2.6 per cent on month-on-month basis to 111.6 in July, offsetting last month's pickup, which had left confidence running at a nine-month high of 114.7. On the global front, Asian markets ended mostly higher on Tuesday, while European stocks rose slightly in early trade. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, tracking mixed trade in Asian peers and sluggish cues from Wall Street in overnight trades. Thereafter, the key indices failed to show any fervor lacking encouraging leads. Finally, the BSE Sensex ended lower by 97.41 points or 0.35% to 28085.16, while the CNX Nifty dropped 33.10 points or 0.38% to 8,678.25.