Markets to make a cautious start on weak global cues

The Indian markets slightly gathered momentum to make a decent close in last session. Today, the start is likely to be a bit cautious on sluggish global cues, though traders will be getting some support with the President Pranab Mukherjee giving his assent to the landmark Goods and Services Tax (GST) Bill. Now the Centre will have to pass the Central GST and Integrated GST Bills, while the states will need to approve their respective GST legislations. The government targets to implement the GST system from 1 April, 2017. Meanwhile, US President Barack Obama has expressed confidence that the Goods and Services Tax, passed by the Indian parliament last month, will unleash significant economic activity. Traders will be eyeing the Index of industrial production data for the month of July to be released after the market hours. Industrial output growth halved to 2.1 per cent in June, as compared to 4.2 per cent in June 2015. The auto stocks will keep buzzing as the sales of passenger vehicles, including cars, grew 16.7% in August from the year-ago period and the Society of Indian Automobile Manufacturers (Siam) has revised its growth projections in the range of 11-13% in FY2017, as against an earlier forecast of 6-8%.

The US markets despite coming off the day’s low ended modestly lower in the last session, following the European Central Bank's announcement of its decision to leave interest rates unchanged, though selling pressure remained relatively subdued, limiting the downside for the broader markets. The Asian markets have made mostly a lower start as investors weighed prospects for further monetary easing in Europe and Japan. Comments from ECB chief Mario Draghi diminishing the prospect of an increase in asset purchases weighed on shares.

Back home, Indian stock markets witnessed a fairly stable day of trade on Thursday as healthy quarterly results, consistent buying by foreign funds and a rise in global crude oil prices, buoyed the investors' sentiments. Some support also came 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. Adding the confidence among investors, Economic Affairs Secretary Shaktikanta Das said that implementation of GST will bring small and medium enterprises (SMEs) into the national value chain and committed many more reforms. Furthermore, with an aim to give capital markets a big push, regulator SEBI is likely to ease out regulations for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), this month. However, there was some concern too with the report that the country-wide monsoon deficit stood at 4% with northeastern and eastern states reporting 13% less rains from June 1 to September 7, 2016. June witnessed a rain deficiency of 11%, while July had 7% of surplus rainfall. August again witnessed a dip of 9.7%. Meanwhile, Auto stocks edged higher after the repot that domestic passenger vehicle sales grew for a 14th straight month in August with a 16.68% increase, promoting auto industry body Siam to revise upward its growth estimate for the ongoing fiscal to 10-12%.  Metal and mining stocks gained traction as Chinese trade data topped forecasts and imports recorded their first annual rise since late 2014.  However, IT and Tech stocks succumbed to heavy selling pressure as TCS gave a cautious outlook for the coming quarters, stating that clients are holding back on discretionary spending. On the global front, rebounding from day’s lows, several Asian markets ended in positive territory on Thursday, while European stocks were slightly higher in early trade. Back home, finally, the BSE Sensex surged by 118.92 points or 0.41% to 29045.28, while the CNX Nifty gained 34.55 points or 0.39% to 8,952.50.