Markets to make modestly positive start after a day of break

The Indian markets before going for a holiday had posted strong gains with benchmarks reaching fresh record highs, on hopes of Goods and Services Tax roll out from July and solid manufacturing data. Today, the start is likely to be in green on mostly positive global cues. Also, markets will be getting some support with the central government exceeding 2016-17 tax target, highest in last 6 years. Government reported a total tax collection of Rs 17.10 lakh crore during 2016-17 -- an increase of 18 per cent over 2015-16. In the revised estimates for FY17 presented in the budget, the government had raised the tax collection target to Rs 17.03 lakh crore against Rs 16.3 lakh crore estimated initially. The IT stocks are likely to react negatively to the report that in the new guidelines issued by the US administration it has been said that companies applying for visas under the H-1B programme must provide “evidence to establish that the particular position is one in a specialty occupation”. However, software industry body Nasscom said that the clarification is expected to have “little impact” on Indian technology companies. There will be some buzz in steel stocks too as the WTO has set up a panel to resolve the dispute between Japan and India over imposition of safeguard import duty on iron and steel products.

The US markets closed modestly in green in the last session, though the trade remained lackluster and the major averages spent the day bouncing back and forth across the unchanged line, ahead of some key events later this week. The Asian markets have made a mixed start with some indices trading marginally in red; however the Chinese market was trading higher coming after a long weekend. The Japanese market too was in green as the yen weakened against the dollar.

Back home, after snapping the last quarter of FY17 with over eleven percent gains, Indian equity markets have started the FY18 on an optimistic note thanks to the supportive global as well as local tidings. Sentiments got some support with the report that the health of India's manufacturing sector rose to a five-month in March 2017. The Nikkei India Manufacturing Purchasing Managers' Index (PMI) rose to 52.5 in March from 50.7 in February. The survey said that incoming new orders expanded at a stronger pace, thereby leading to quicker increases in production and input purchasing. Moreover, firms hired additional employees to cope with greater workloads. Investors got some comfort with the report that the India's GDP growth is expected to pick up again to 7.6 per cent next year thanks to improving consumption, timely rains, higher public sector spending and better export growth. According to the report, the ongoing reforms will strengthen the productivity part of growth and the country's GDP will benefit from India's favourable working age population growth.  Some support also came with Union Minister of State for Finance Arjun Ram Meghwal's assurance that the historic tax reform Goods and Services Tax (GST) will see 100 percent implementation from July 1, 2017.  He also said that the Centre is already working on ironing out any road-block and even States are co-operating. However, gains remained capped with the report that Core sector growth slowed to a 15-month low in February, led by a drop in cement output. Growth, as measured by the index of eight core industries, eased to 1 percent in February from 3.4 percent in January and 9.4 per cent a year earlier. Finally, the BSE Sensex surged 289.72 points or 0.98% to 29910.22, while the CNX Nifty was up by 64.10 points or 0.70% to 9,237.85. Indian markets remained closed on Tuesday on account of Ram Navami.