Markets to see some consolidation, to make a soft start of budget week

The Indian markets continued their upmove in last session and the benchmarks added another about half a percent to the gains. Today, the start of the Budget week is likely to be a bit cautious on mixed global cues, traders will be reacting to some mixed earnings announcements during the weekend. Though, there will be some support to the markets once after recovering from the initial hiccups, with the tax department assuaging investors concern ahead of implementation of GAAR from April 1. The Central Board of Direct Taxes said in clarifications on GAAR, has said aid adequate procedural safeguards are in place to ensure that General Anti-Avoidance Rules (GAAR), which seek to prevent companies from routing transactions through other countries to avoid taxes, are invoked in 'a uniform, fair and rational manner'. There will be some action in the aviation stocks on a report from A NITI Aayog that air traffic grew 23% to almost 77 million during April-December period. The gems and jewellary sector stocks too will keep buzzing with industry's apex trade promotion body Gem Jewellery Export Promotion Council (GJEPC) stating that gems and jewellery exports are likely to witness a growth of about 10 per cent this fiscal due to increasing demand in the US and Europe. There will be lots of important earnings announcements too, to keep the markets buzzing.

The US markets made a mixed closing in last session after a lack luster trade, as investors weighed disappointing fourth-quarter data on domestic economic growth and a spate of earnings. The Asian markets have made a mixed start, concerned over the immigration policy of the US President Donald Trump.

Back home, Indian equity indices staged a decent performance on the last day of the week by gaining around half percent in the session. Wednesday’s optimism got spilled over into the Friday’s session helping the frontline indices in extending the winning momentum for fourth successive session as investors remain optimistic ahead of the Union Budget next week. Besides, better than expected corporate earnings also aided the sentiments. Investors remained optimistic after Finance Minister Arun Jaitley put up a spirited defence of demonetisation, saying the drive 'shook' the financial system for a short while, but will integrate the shadow economy with the formal in the long run and ensure better tax compliance. He also said most contentious issues regarding the Goods and Services Tax (GST) have been sorted out between the Centre and states and the new indirect tax regime is at the final stages of implementation. Furthermore, market participants got some comfort with the report indicating that money in circulation is rising again in India post-demonetisation period and at the current rate, currency-to-GDP ratio will reach about 9 per cent by March -- sufficient to stabilise economic activity. According to report, the negative effects of demonetisation on growth are likely to be transitory as demand conditions are likely to re-surface after remonetisation and the economy is expected to see a V-shaped recovery. Some support also came in on report that foreign institutional investors bought shares worth Rs 1378.81 crore on January 25, 2017. However, gains remained capped with Reserve Bank of India’s (RBI) statement that business sentiments of the Indian manufacturing sector deteriorated in the third quarter of the current financial year and are likely to decline in the fourth quarter. The survey, which conducted between October and December, shows that businesses were less optimistic about several parameters like order books, capacity utilisation and imports. The mood around exports, however, improved reflecting a recent pick-up in export growth. On the global front, Asian markets ended mostly lower on Friday amid a deepening rift between the U.S. and Mexico and ahead of U.S. fourth-quarter advance GDP figures on tap later in the day. Back home, finally, the BSE Sensex gained 174.32 points or 0.63% to 27882.46, while the CNX Nifty was up by 38.50 points or 0.45% to 8,641.25.