The Indian markets had made a dismal closing of last week with another negative ending amid uncertainty over US election results, and the first week of Samvat 2073 witnessed cuts of over two percent. Today, the start is likely to be in green and the markets will see recovery tailing the gains in Asian markets after the US FBI informed Congress that a review of new emails found in relation to the bureau’s investigation into Hillary Clinton’s use of a private email server had not yielded any reason for charges against the Democratic presidential nominee. On the domestic front the traders will be getting support with a survey report that India improved its ranking by one spot in a global index of business optimism, with policy reforms and Goods and Services tax (GST) expected to become a reality soon. India was ranked second on the optimism index during the third quarter (July-September 2016). Also, foreign direct investment (FDI) into the country grew by over 30 percent to $ 21.62 billion during the first half of 2016-17. During April-September of 2015-16, India received FDI worth $ 16.63 billion. The Tata group stocks will once again be buzzing with a group of foreign institutional investors (FIIs) that together own more than 10% of Tata Motors expressing concerns over Tata Sons having access to strategic information about Tata Motors. There will be lots of important result announcements too, to keep the markets in action.
The US markets ended lower in last session amid election outcome concerns and traders shrugged off the largely positive jobs report. Most of the Asian markets have made a green start and the Japanese market has advanced over a percent as the yen weakened the most in a month after dollar strengthened on latest FBI report. The Chinese market was marginally lower and the Hong Kong property shares tumbled after the government announced shock measures to cool the affordable housing market.
Back home, the carnage in Indian equity markets prolonged for yet another session as the frontline indices continued to sway to the tune of gloomy global developments and deposed another half a percentage point on the last trading session of the week. The session was characterized by extreme volatility as nervous investors fretted over the potential outcome of the US presidential election, which has become too close to call, on November 8, 2016. Investors had largely priced in a Hillary Clinton win in the election, but nerves creeped in when news broke last week that the FBI was investigating new emails linked to the Democratic candidate. On domestic front, Sun Pharmaceuticals and Reliance Industries (RIL) have proved to be the main culprits for today's major fall. RIL, with the highest weightage on Sensex, got bludgeoned by close to two percent in the session after the Centre issued a penalty of $1.55 billion (approximately Rs 10,340 crore) on Reliance Industries for drawing and selling natural gas from the state-owned Oil and Natural Gas Corporation's idle block in the Krishna-Godavari basin. Further, Pharma stocks including Sun Pharmaceuticals edged lower after US prosecutors are bearing down on generic pharmaceutical companies in a sweeping criminal investigation into suspected price collusion, a fresh challenge for an industry that’s already reeling from public outrage over the spiraling costs of some medicines. Meanwhile, investors also overlooked reports that the GST Council fixed a four-slab tax structure for GST implementation. Four-tier GST tax structure of 5, 12, 18 and 28 per cent that aims to lower tax incidence on most goods and keep out essential items was decided by a high-powered council, a major breakthrough for rollout of the Goods and Services Tax regime from April 1 next year. According to Chief Economic Advisor Arvind Subramanian, the GST Council’s decision to peg the tax rate on items of mass consumption at 5 per cent will bring down prices and soften inflation. Finally, the BSE Sensex declined by 156.13 points or 0.57% to 27274.15, while the CNX Nifty dropped 51.20 points or 0.60% to 8,433.75.
