Markets to make a cautious start, extending the consolidation mood

The Indian markets turned into consolidation mood, with traders booking some profit in the last session after the recent rallies. Today, the start is likely to be cautious on sluggish global cues, though traders will be getting some encouragement with Finance Minister Arun Jaitley’s statement that the government is 'running against time' for the implementation of GST, but added that he would certainly like to give it a try. He said the new GST, once implemented, would have a transformational impact by creating a common market in the country, while also acting as a transfer mechanism that would aid poorer states. Meanwhile, Economic Affairs Secretary Shaktikanta Das has said that implementation of the goods and services tax will bring small and medium enterprises (SMEs) into the national value chain and committed many more reforms.  There will be some buzz in the aviation sector as the domestic air travel surged with 26.2 per cent traffic growth in July, while globally domestic travel demand climbed 3.8 per cent in July, compared to the same month last year. There will be some buzz in services oriented stocks too, as Commerce Minister Nirmala Sitharaman has said that India will present proposals to the World Trade Organization on ways to ease trade in services.

The US markets after a lackluster trade ended almost flat in last session, though the tech-heavy Nasdaq reached another new record closing high. Traders largely shrugged off the Federal Reserve's Beige Book, which said economic activity continued to expand at a modest pace from July through late August. The Asian markets have made mostly a lower start, with some indices falling for the first time in last four days. Japanese market also declined, as investors assessed the chances of government stimulus after revised data showed the economy grew more than estimated.

Back home, it turned out to be a lackadaisical performance from the benchmark indices on Wednesday as they failed to snap the session in the green territory and settled marginally below the neutral line.  The frontline gauges took a breather, a session after showcasing a scintillating performance as market participants remained on the sidelines lacking conviction amid the persistent worries over Thursday’s meeting of the European Central Bank. Anxiety among investors further increased after disappointing US services data reignited worries about growth in the world’s largest economy. However, the downside risks for the frontline indices was limited by reports that the government has begun the groundwork for creation of a secretariat to cater to the Goods and Services Tax (GST) Council, which will be constituted after Presidential assent for the Constitution Amendment Bill enabling implementation of the proposed tax. The government wants the institutional arrangements ready so that the GST Council can start deliberating the nuances of the law quickly. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1439 crore on September 06, 2016. Investors were also optimistic  about the private report indicating that India is on the path of becoming a 'pivot' for high-tech world manufacturing even as global manufacturing growth is expected to remain low in 2016 due to weakened financial support for productive activities. Meanwhile, stocks related to agriculture and irrigation gained traction on report that India’s apex rural-development bank National Bank for Agriculture and Rural Development (NABARD) will manage a Rs. 77,000 crore corpus as part of a Central government push to complete 99 unfinished irrigation projects across the country by 2019 and bring water to 76.03 lakh hectares. Good buying was also observed in many banking stocks on the report that services sector data, which came out yesterday, showed there is still room for the Reserve Bank of India (RBI) to cut interest rates further. Finally, the BSE Sensex declined by 51.66 points or 0.18% to 28926.36, while the CNX Nifty dropped 25.05 points or 0.28% to 8,917.95.