Markets to make a positive start on GST hopes

The Indian markets picked up some pace in the late hours and managed to post modest gains in last session’s trade. Today, the start is likely to be in green and trade will be supported by the news that India will likely be able to roll out the goods and services tax (GST) from July1, following a breakthrough on Monday over the seemingly intractable issue of tax administration after the Centre accommodated states’ concerns. Under the proposed tax regime, 90% of all assessees with a turnover of Rs 1.5 crore or less will be assessed for scrutiny and audit by state authorities, the remaining 10% by the Centre.  Market will also be supported by Reliance Industries’ earnings, the company beating estimates reported a 10% year-on-year jump in its standalone net profit to Rs 8,022 crore during the October-December quarter. Gross refining margin (GRM) for the quarter came in at $10.8/bbl, below estimate but higher than $10.1 a barrel reported for the previous quarter.  However, there will be some concern as well with IMF cutting India’s growth rate for this financial year to 6.6 per cent from 7.6 per cent earlier due to the 'temporary negative consumption shock' of demonetisation. Though, it has said that the Indian economy is likely to revive to go back to its previously estimated growth rate of 7.7 per cent in 2018. There will be buzz in realty sector too, on a private report that the real estate sector attracted Rs 38,000 crore as private equity investments in 2016, up 62% over the previous calendar year.

The US markets remained closed in last session, unable to give any cues to the other global markets. The Asian markets have made a mixed start as investors turned cautious ahead of U.K. Prime Minister Theresa May's speech on her government's Brexit plans later today. Chinese markets too are in red, extending the rout to six days, their worst run in three years.

Back home, Monday’s trading session was clearly of consolidation as the Indian frontline indices appeared a bit fatigued and remained in directionless trajectory throughout the day. However, the benchmarks managed to end the session in positive territory on pinning hopes that the deadlock over the GST bill will finally end. Market witnessed bargain-hunting as well as short covering throughout the session amid lack of direction, with caution gripped by the currency exchange, the upcoming Union Budget, General Anti-Avoidance Rule (GAAR), impending state elections, and flux in US policy. Sentiments got some support with report that exports jumped for the fourth month to 5.7 per cent in December to $23.8 billion, the highest since March 2015. As many as 18 of the 30 exporting sectors registered growth. Further, Investors’ morale remained upbeat as Moody's Investors Service and its Indian affiliate ICRA said India will remain one of the fastest growing major economies globally in 2017, although GDP growth will moderate in the first half of the year, as the economy adjusts after demonetisation.  The rating agency also believes that the government will likely achieve its fiscal deficit target of 3.5% of GDP for the current fiscal year ending March 31, 2017. However, gains remained capped on the report that India's wholesale inflation firmed up in December led by higher inflation in non-food products. Data released by commerce and industry ministry showed WPI inflation at 3.39% in December compared with 3.15% in November. WPI inflation in manufactured products, which has a 64.97% weight in the index, rose to 3.6% from 3.2% in the previous month, while Food inflation turned negative as food prices fell 0.7% in December 2016 from a year ago against a 1.54% rise in the previous month. Meanwhile, Realty stocks gained traction after market regulator SEBI said Indian mutual funds will be allowed to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), while Oil marketing companies such as IOC and BPCL rose after they hiked petrol prices by 42 paise a litre on Sunday, the fourth increase in 6 weeks, and diesel rate by Rs 1.03 a litre, the second hike in a fortnight. Also, public sector banks (PSBs) too came into limelight on report that the Finance Ministry is likely to finalize capital infusion plan for PSBs this week. Finally, the BSE Sensex gained 50.11 points or 0.18% to 27288.17, while the CNX Nifty rose 12.45 points or 0.15% to 8,412.80.