Markets to get a cautious start, may see some recovery in latter trade

The Indian markets suffered sharp cuts in last session and the major averages slipped below their crucial support levels. Today, the start is likely to be cautious but some recovery can be expected after the big fall of last session, and traders will go for value picking. Meanwhile, Commerce and Industry Minister Nirmala Sitharaman has said that the full impact of the UK's decision to exit European Union on India may take some time to unfold. She added that the opportunities for India would depend on Great Britain's negotiations of terms of exit with the European Union and their future negotiated trade relations. There will be some action in the textile stocks, as the Lok Sabha passed the Taxation Laws (Amendment) Bill, 2016, relaxing the rules for the textile sector to avail itself of the income tax benefit on additional employment created. On the same time the telecom stocks will be under pressure, as the Department of Telecom has 'suspended' spectrum sharing, trading and liberalisation activities till the provisional results of the upcoming spectrum auction are declared. The broking and non-banking financial companies will be in jubilant mood, with the cabinet approving amendments to the Foreign Exchange Management (Transfer or Issue of Security by the Person Resident Outside India) regulations on NBFCs to this effect.

There will be lots of important earnings announcements to keep the markets buzzing. Bank of Baroda, Aditya Birla Nuvo, ABG Shipyard, Balrampur Chini, Dhanlaxmi Bank, IPCA Labs, Godrej Industries, JK Lakshmi Cements, MRF, Page Industries, VIP Industries and Coffee Day Enterprises are among many to announce their numbers.

The US markets made another mildly soft ending in last session, amid a steep drop by the price of crude oil. Trading through the day remained subdued lacking major US economic data on the day. The Asian markets have made mostly a lower start, as the crude fell for a third day, after a surprise gain in American stockpiles inflamed concerns about oversupply.

Back home, Wednesday’s trading session turned out to be an awful session for the Indian benchmark indices, which crumbled like a ‘house of cards’ and went on to breach various key technical levels in the over a percent freefall. Marketmen looked at every rise as opportunity to take profits off the table as there emerged no encouraging factor that could halt the unrelenting selling. The sentiments were also undermined by reports that noted that the gross non-performing assets (GNPAs) of the public sector banks increased Rs 2.16 lakh crore in 2013-14 to Rs 4.76 lakh crore in 2015-16.  The report also said that the top 100 borrowers of public sector banks owe nearly Rs 14 lakh crore to them. Further, traders failed to draw any sense of relief with the report that tax collections have grown up at a robust pace in the first four months of the current fiscal with central excise and personal income tax showing impressive gains. Direct tax collections grew 24% in April-July over corresponding period last year, while indirect taxes were up by 29.9% over the same period.  Meanwhile, the Oil & Gas counter did the maximum damage as Oil prices extended losses in early trade after industry data showed a rise in US crude stockpiles, supporting oversupply concerns. Sugar stocks also came under pressure after the food ministry recommended suspending futures trade in sugar for the time being and imposed stock holding limits on sugar mills. The steps have been taken in view of the upcoming festival season. Further, banking stocks continued their southward journey for the second straight session after Raghuram Rajan at his last monetary policy review meeting as RBI governor hinted upside risks to inflation, while keeping key policy rates unchanged. On the global front, Asian markets ended on a mixed note on Wednesday, while European stocks traded lower in early deals. Back home, the benchmark got off to a somber opening, extending the downtrend for the second straight session as pessimistic sentiments prevailed in global markets. Thereafter, the frontline indices lost the plot and kept tumbling down the hill without any stoppage. Finally, the BSE Sensex slumped by 310.28 points or 1.10% to 27774.88, while the CNX Nifty dropped 102.95 points or 1.19% to 8,575.30.