Markets to make a positive start tailing positive global cues

The Indian markets rallied vehemently in last session, with Sensex posting its biggest single-day gain in nearly five months and Nifty in a year. Today, the start is likely to be in green on positive global cues but some profit taking too may appear after the huge rally of last session. Meanwhile, the GST Council meeting on Tuesday headed by Finance Minister Arun Jaitley discussed a four-slab GST tax structure of 6, 12, 18 and 26 percent with lower rates for essential items and the highest for luxury goods that will also be levied with an additional cess. Jaitley also informed that the GST Council meeting has reached a consensus on definition of revenue to compensate states for revenue loss from GST implementation. Traders will also be reacting to minutes of the Monetary Policy Committee (MPC) debut meeting, which unanimously agreed to reduce repo rate on a broad concerns over economic growth and relief from the pullback in inflation. Should RBI decide to carry on in this line, the chances of further rate cuts will grow. There will be some buzz in the auto sector, as the road transport ministry has said that Form 22 under the Central Motor Vehicles Act, 1989, has been amended. From April next year manufacturers would have to provide initial certificate of compliance with pollution standards, safety standards of components quality and road-worthiness certificate for all vehicles. There will be lots of important earnings announcements too, to keep the markets buzzing.

The US markets closed higher in last session but were well off the day’s high. Traders picked up stocks at reduced levels amid latest batch of good corporate results, while on economy front consumer prices rose in line with estimates in the month of September. The Asian markets have made mostly a positive start, extending their last session gains on added evidence that the Chinese economy has stabilized after China reported a 6.7 percent increase in its gross domestic product for the third quarter.

Back home, value buying, coupled with broadly positive global cues and raising hopes of rate cut by the central bank following easing inflationary pressures lifted the Indian equity markets on Tuesday.  Investors continued to build hefty positions across the board as sentiments got a boost after mixed US economic data helped ease worries about a possible rate hike by the Federal Reserve in November. On the domestic front, investors’ morale remained upbeat with private report stating that India’s current account deficit is likely to stay below 1 per cent of GDP this year, largely due to a sharp fall in the trade deficit as against last year. Besides, appreciation in Indian rupee against dollar added to the optimistic sentiments.  Some support also came with Global rating agency Moody’s report that the draft bill to establish a new regime for resolution of troubled banks in India is credit positive, as it will help to enhance overall stability of the financial system. The draft bill which seeks to establish Resolution Corporation will have to go through multiple steps before becoming law. Meanwhile, investors were keeping an eye on the government meeting on the goods and services tax (GST) for clarity on rates. The three-day meeting of the GST Council, comprising federal and state finance ministers, will decide the main tax rate and those for different sectors. Almost 20-25 per cent of all taxable goods, including those consumed by the middle class, could come under the peak rate. On the global front, Asian share markets ended higher on Tuesday, while European markets were trading sharply higher in early deals. Back home, the local benchmark indices got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The bourses further capitalized on the momentum and spurted in noon trades on the back of broad based bottom fishing in undervalued stocks. The northbound journey only concluded with the close of the session helping the key gauges in recovering the ground lost in last one week. Finally, the BSE Sensex surged 520.91 points or 1.89% to 28050.88, while the CNX Nifty ended up by 157.50 points or 1.85% to 8,677.90.