Markets to start the new week on a soft note tailing somber global cues

The Indian markets after much of dilly-dallying ended modestly in red in last session, with traders remaining on sidelines. Today, the start of the new week is likely to be soft amid weak global cues after Janet Yellen and Fed Vice Chairman Stanley Fischer hinted for a rate hike. However, markets may get some support with reports that in order to ensure that GST is rolled out by April 1, 2017, the government is trying hard to get the winter session of Parliament advanced by a fortnight to pass the bill. Winter Session of Parliament is normally convened in the third or fourth week of November. Meanwhile, US Commerce Secretary Penny Pritzker ahead of his three day visit to India has said that US-India bilateral trade has reached $109 billion and it will get a further boost from new reforms including GST even as it flagged persisting concerns American firms have on issues related to business climate in the fast-growing economy. Also, the Economic Affairs Secretary Shaktikanta Das has said that India is expected to clock a GDP growth of nearly 8 percent this fiscal on the back of good monsoon rains. He said that Agriculture production is expected to be much better than previous two years and definitely agriculture will contribute significantly to the GDP. There will be some buzz in the rate sensitive stocks, as Union Minister Nirmala Sitharaman has defended her demand for 2 per cent cut in interest rates by RBI, saying it is essential to boost SMEs and create jobs.

The US markets ended mostly lower in the last session on hawkish statement from Federal Reserve Chairwoman Janet Yellen that asserted the case for a rate increase is gathering steam. The Asian markets have made mostly a lower start, with many of the indices trading lower by over half a percent; however a rally in the US dollar weakened the Japanese yen, sending the Nikkei sharply higher.

Back home, wary investors, hesitant to carry large positions ahead of a speech by Federal Reserve chairwoman Janet Yellen that may shed light on the US interest-rate outlook, turned sellers on Friday, sending the frontline indices southward for the second consecutive day. The day was the first day of new F&O series and normally this day heavy build up of long positions are observed, but fall in the frontline indices indicated that some FIIs and DIIs were shedding their positions. Anxiety among the market participants also increased by the report that India Inc's overseas borrowings fell by 44 percent to $1.2 billion in July this year as against $2.14 billion in the same period a year ago, indicating slowdown in capital expenditure (capex) plans by many major firms.  Indian firms raised $183.7 million via approval route, while rest $1.02 billion was raised by way of automatic channel. Also, India Meteorological Department (IMD) in its latest monsoon update said that for the country as a whole, cumulative rainfall during this year's monsoon so far (till 24 August 2016) was 2% below the long period average (LPA), adding pessimism among the local investors. Market participants failed to drew any solace with the RBI's package of measures for the development of fixed income and currency markets.  The central bank has decided to enhance the aggregate limit of partial credit enhancement (PCE) provided by banks, permit brokers in corporate bond repos, authorise the platform for repo in corporate bonds and encourage credit supply for large borrowers through market mechanism. On the global front, Asian markets ended mixed on Friday. Back home, the local benchmarks got off to an optimistic opening, shrugging the sluggish sentiments prevailing in Asian markets post weak closing of US markets overnight. However, the indices slipped into the negative territory in late morning trade and even went on to test important psychological 27,700 (Sensex) and 8,550 (Nifty) levels in afternoon trade. Finally, the BSE Sensex declined by 53.66 points or 0.19% to 27782.25, while the CNX Nifty dropped 19.65 points or 0.23% to 8,572.55.