Markets to make a positive start on supportive global cues

The Indian markets consolidated in the last session after surging in the previous one, traders booked some profit while the global cues remained mixed. Today, the start is likely to be in green. Market will be getting some strength with Prime Minister Narendra Modi’s statement that India was the fastest growing economy and that it can play a major role in providing strength to global economy that is facing slowdown. However, there will be some cautiousness too, as the GST Council’s third round of deliberations ended without a decision on the rates structure after most States objected to a proposal to levy an additional cess on demerit goods.  The GST Council will meet again on November 3-4 to take decision on the Goods and Services Tax rates, which will have four slabs. The Centre had proposed the cess as a means to finance the compensation it will have to pay States. There will be some buzz in the aviation stocks on report that domestic airlines flew 82.30 lakh passengers in September this year, registering a growth of 23.46 per cent, over the 66.66 lakh passengers carried during the same period in the previous year. The banking stocks too may see some reaction to report of huge data breach affecting several key banks. There will be lots of important earnings announcements too, to keep the markets buzzing.Reliance Industries, YES Bank, Biocon, LIC Housing Finance, DB Corp, NOCIL etc will report their numbers.

The US markets managed a modestly positive close in last session after the oil prices firmed up following the release of a report showing an unexpected drop in weekly crude oil inventories. Traders even overlooked Commerce Department report that housing starts unexpectedly tumbled to their lowest level in well over a year in September. The Asian markets have made mostly a positive start, led by the Japanese market which is up by over a percent in early deals as the yen weakened against the dollar.

Back home, After showing a firework in last session, Indian Benchmark indices ended the Wednesday’s session on a dismal note as investors chose to remain on the sidelines eyeing the ongoing government meet on the goods and services tax (GST) for clarity on new rates. The crucial GST Council meeting, comprising federal and state finance ministers, will decide the main tax rate and those for different sectors. Also, Caution prevailed ahead of some key company results. This week, companies such as Biocon, Reliance Industries, ACC, Wipro and HCL Technologies are slated to report quarterly results. Sentiments remained subdued with minutes of the Reserve Bank of India’s maiden monetary policy committee (MPC) meeting, released on Tuesday, whereby the rate panel eyed growth concerns. The minutes showed that broad concerns over economic growth and relief from the pullback in inflation, spurred the bank’s recent rate cut decision. However, investors got some confidence with Steel Minister Chaudhary Birender Singh’s statement that India is seen as the sole bright spot in a troubled global economy. Confident that 'Make in India' will transform the nation into a manufacturing powerhouse, Minister has also said that nearly $26 billion has flowed into the country this year so far since we opened the floodgates for FDI across sectors. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 345.04 crore on October 18, 2016. Meanwhile, selling was witnessed in selected FMCG stocks on fears that higher GST rate on select products would result in price hikes and hurt volume growth going forward. Financial stocks witnessed profit taking with ICICI Bank down 1.7 percent after gains of 11 percent in the previous two sessions. However, logistics companies edged higher after the goods and services tax (GST) council worked out a compensation formula for states and is now bracing for a testy debate on rates. The Centre has proposed a tiered rate structure with the rates varying from 4% for commodities like gold to 26% plus cess on so-called sin goods. Finally, the BSE Sensex declined by 66.51 points or 0.24% to 27984.37, while the CNX Nifty dropped 18.80 points or 0.22% to 8,659.10.