Markets likely to remain in consolidation mood on sluggish global cues

The Indian markets giving up their mid day recovery slumped in last session and the major averages deposed over half a percent for the day, slipping below their crucial levels. Today the start of the penultimate session of the F&O expiry is likely to be flat to mildly in red and the trade will be impacted by the ongoing geo-political tension and the material stocks will be under pressure with China’s debt rating cut by Moody’s. Also, the Australian weather office has said that El Nino still has a 50 per cent chance of developing later this year, though all international models say if it develops, it will be weak. Traders may get some support with Prime Minister Narendra Modi’s statement that our aim is that India must be an engine of growth as well as an example in climate friendly development in the years to come. There will be some action in financial sector stocks on buzz that the government is likely to introduce in the monsoon session of Parliament a separate bankruptcy law to deal with insolvency in financial sector companies that include banks and NBFCs. The DTH and cable services provider companies too may see some upmove as the government has said that taxation on entertainment, cable and DTH services shall come down under the Goods and Services Tax regime as the 'entertainment tax' levied by states has been subsumed in the GST. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets despite a lackluster day of trade managed to end modestly higher in the last session, with the major averages extending their gains for the fourth straight session. Stocks continued to benefit from the upward momentum seen in recent days though there was some cautiousness ahead of tomorrow's release of the minutes of the latest Federal Reserve meeting. The Asian markets have made a mixed start and the Chinese markets were trading in red after Moody’s Investors Service cut its rating on the country’s debt, saying the outlook for its financial strength will worsen.

Back home, Indian benchmark indices failed to extend the gains on Tuesday as jittery investors chose to take profits off the table amid weak global cues. An explosion struck an Ariana Grande concert in northern England late yesterday, killing at least 19 people and injuring dozens. Britain’s terrorist threat level has been set at ‘severe’ in recent years, indicating an attack is highly likely.  The sentiment was also dragged down by geopolitical tensions as Indian army strikes Pakistan military posts. Indian Army spokesperson Major General Ashok Narula said Pakistan Army has been supporting armed infiltration in Kashmir and targeted attacks have been carried out to put an end to such activities. Sentiments also remained dismal with India Ratings and Research’s (Ind-Ra) latest report indicating that Goods & Service Tax (GST) implementation will affect the working capital cycle of business in the initial phase owing to the lock up of input credit. It noted that easy liquidity in the system is essential to minimise the magnitude of such disruption at the earliest and to absorb the sudden changes in requirement of short term finance. Furthermore, with the prices of crude oil starting to recover, investors remained concerned over the report that India’s petroleum self-sufficiency fell to 17.9% in 2016-17, its lowest annual level since 2011. The self-sufficiency percentage is calculated by using the total production from Indigenous Crude & Condensate and the total petroleum consumption of the country. For the month of April, this percentage fell further to 16.6%, lower from 17.9% seen for the month of April 2016. India’s fast-growing demand for petroleum products has been the significant contributor to the fall in its self sufficiency in meeting these demands. Investors failed to get any sense of relief with a new survey by the Confederation of Indian Industries (CII) and Indian Bank’s Association (IBA) showing that the outlook towards the financial condition of the country has taken a positive turn during the first quarter of the ongoing fiscal. The CII-IBA Financial Conditions Index stood at 56.9 for first quarter of 2017-18, as compared to 48 during the previous quarter. Finally, the BSE Sensex lost 205.72 points or 0.67% to 30365.25, while the CNX Nifty was down by 52.10 points or 0.55% to 9,386.15.