Markets to make some recovery with a positive start

The Indian markets after a volatile trade and some recovery attempt ended modestly lower in the last session and the Nifty slipped below the 9150 mark, with traders reacting to a mixed batch of earnings. Today, the start is likely to be in green tailing the mostly positive cues. Traders will also be getting some support with the World Bank’s latest report, in which it said that India’s economic momentum is expected to pick up speed from 6.8 percent in 2016 to 7.2 percent by 2017 after a modest setback due to weaker than expected investments and the effects of the withdrawal of large denomination bank notes. It also said that timely and smooth implementation of the GST could prove to a significant benefit to economic activity. However, India faces the challenge of further accelerating the responsiveness of poverty reduction to growth.  There may be some cautiousness in the market with Citi reportedly pointing out finance ministry officials, how some global banks and funds were taking advantage of India’s treaty with France to escape tax. Also, concerned over the rising prices of steel and rupee appreciation, engineering exporters’ apex body EEPC India has approached the Commerce Ministry seeking its intervention to curb such volatility which is adversely impacting the sector. The whole IT pack will be in focus, as India’s largest IT company Tata Consultancy Services (TCS) is scheduled to report its earnings for the quarter ended March 31, 2017. There will be lots of other important earnings announcements too, to keep the markets buzzing. PSU stocks too will be in action as government plans to sell stakes worth $5.4 billion in seven state-run companies during the current financial year as Asia's third-largest economy looks to fund its fiscal deficit amid ramped-up spending on rural areas and infrastructure. The part sale of government stakes in state-run and private firms is critical to meet the fiscal deficit target of 3.2% of gross domestic product in the year to March 2018. India aims to raise Rs 725 billion ($11.26 billion) through stake sale during the year.

The US markets surged in last session despite some disappointing economic data; traders mainly resorted to bargain hunting after the major bourses slipped to their month’s low. The Asian markets have made a mixed start with some indices trading marginally in red, though Japanese shares gained amid a weaker yen after the Treasury Secretary Steven Mnuchin said that the dollar’s strength is a good thing.

Back home, Indian equity markets commenced the week on a sluggish note as the benchmarks showcased an unenthusiastic performance on Monday and settled marginally below the neutral line. The key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction amid the persistent worries over North Korea and coming French elections. Sentiments remained subdued with Reserve Bank of India's report that credit growth plunged to a whopping six-decade low of 5.08% in the financial year 2016-17, as against 10.7% a year ago. Investors also remained cautious with the private report that India's current account deficit (CAD) is expected to widen to 1.6% of GDP this year from 0.5% in 2016, owing to higher commodity prices and an expected strong domestic recovery. According to the report, stronger global demand and higher export prices are driving exports recovery, while the recovery in imports reflects higher commodity prices and likely improvement in domestic demand. Adding the woes, Revenue Secretary Hasmukh Adhia said that services sector is likely to attract a higher tax rate of 18% from the current 15% under the Goods and Services Tax (GST) regime, thus making services 'slightly' more expensive.  He also said Tax buoyancy is likely to take a hit under the GST regime with the government predicting a very modest 8-9% growth in the indirect tax collections in the first year of GST implementation. In the previous fiscal year, indirect tax collections recorded a growth of 22%. However, downside remained capped with the report that Inflation based on the wholesale price index slipped to 5.70% in March due to easing fuel prices and cost decline of manufactured goods even as food prices hardened. Fuel and power inflation rose 18.16% in March from 21.02% last month. The WPI inflation, reflecting the annual rate of price rise, in February was 6.55%. Some support also came with the report that growth in exports of goods from India reached its peak in the last month of fiscal 2016-17 with a 27.59% increase, year-on-year, to $29.23 billion in March 2017. After two continuous years of decline, exports in April-March 2016-17 posted an increase of 4.71% to $274.64 billion compared to the previous fiscal. Finally, the BSE Sensex decreased 47.79 points or 0.16% to 29413.66, while the CNX Nifty was down by 11.50 points or 0.13% to 9,139.30.