Markets to make a cautious start; Tata group stocks in focus

The Indian markets despite coming off their day’s high managed a positive close in last session; the major averages were up by around a quarter percent. Today, the start is likely to be cautious and the markets will be eyeing the development in the Tata group stocks after promoters Tata Sons in a surprise decision made Chairman Cyrus Mistry to step down from his post. Tata's announced that Mistry was stepping down as Chairman and Ratan Tata had returned to take over the role in the interim. A three-member panel comprising Venu Srinivasan, Amit Chandra and Ronen Sen has been entrusted with the task of finding a new Chairman within four months. Meanwhile, after the former Finance Minister P. Chidambaram said that too many GST rates would be disastrous, NITI Aayog Vice-Chairman Arvind Panagariya has defended the Centre’s proposal for four-tier rate structure and a cess under the Goods and Services Tax and said that said these would ensure less inflationary implications and lower tax rates for consumers as well as revenue predictability for the exchequer. There will be some buzz in the PSU and banking stocks as the finance ministry has asked PSUs such as NTPC, Steel Authority of India (SAIL) and Cochin Shipyard to explore taking over some stressed projects in their respective sectors as current promoters are lax or unable to repay debt. There will be lots of earnings reaction with many important companies slated to announce their numbers.

The US markets ended higher in last session, adding to gains of previous week. Traders digested latest batch of quarterly results and took encouragement with flurry of activity on the merger-and-acquisition front. The Asian markets have made a mixed start, with some indices moving higher on advancement in industrial metals and reports showing manufacturing is picking up in the US and the euro area.

Back home, Indian equity bourses commenced the fresh week on a positive note as gains in select financials helped offset losses in IT majors, amid firm European cues. Sentiments remained up-beat for the markets with Prime Minister Narendra Modi’s statement that the Goods and Services Tax law will boost domestic demand, create more opportunities for domestic business and drive job creation. He also said that India is the fastest growing major economy and one of the most attractive destinations for FDI. Investors also got some confidence with the Union Minister Arjun Ram Meghwal’s statement that country’s economy will grow 8 percent this fiscal, while agricultural growth is expected to be over 4 percent. However, gains remained capped with the report that Private equity investments declined 53 percent to touch $2.5 billion during July-September this year, lowest in the last nine quarters, largely owing to absence of big ticket deals. According to the report, there were 241 PE transactions worth $2,538 million in the September quarter this year, while there were 303 deals worth $5,446 million in the corresponding period last year. Meanwhile, Aviation stocks came under pressure after the report that DGCA and BCAS are all set to get powers to impose fines on violators, with the government preparing to amend the legislation in this regard. Currently, there is no provision for levying penalties. Further, telecom majors like Bharti Airtel slipped after the report that India's telecoms regulator recommended the top three network operators be fined a combined Rs 30.5 billion ($455 million), saying they were denying new entrant Reliance Jio sufficient interconnection points. Airtel and Vodafone India were fined for 21 zones each, while Idea was fined for 19 zones. On the global front, Asian markets ended higher on Monday, while the European markets started the week in a buoyant mood. Back home, the major indices failed to capitalize on the initial momentum and see-sawed around the neutral line in a very tight band throughout morning trade as investors remained sideways in the absence of any significant trigger at domestic front, however hefty buying at several counters got triggered after strong opening of European markets. Finally, the BSE Sensex gained 101.90 points or 0.36% to 28179.08, while the CNX Nifty rose 15.90 points or 0.18% to 8,708.95.