Markets to get a soft to cautious start on sluggish global cues

The Indian markets gradually recovering from a slow start posted modest gains in last session. Today, the start of the data heavy week is likely to be cautious tailing the sluggishness in the global markets. Also, as the State Bank of India has expressed concern that demonetisation, announced in November 2016, may continue to result in slowing down of the economy, and adversely affect its business. It said that the long-term impact of this move on the Indian economy and the banking sector is uncertain. Though, markets will be reacting to the outcome of GST Council meeting during the weekend which revised rates on 66 items such as pickles, sauces, fruit preserves, insulin, cashew nuts, school bags, colouring books, notebooks, printers, cutlery, agarbattis and cinema tickets, following representations from industry. Also, the Indian forex reserves surged by $2.404 billion to reach life-time high of $ 381.167 billion in the week to June 2 on account of rise in foreign currency assets Meanwhile, traders will be keenly eyeing two key economic indicators - IIP and CPI inflation numbers, which are scheduled for released after the market hours. There will be some buzz in the banking stocks, as the Finance Minister Arun Jaitley will meet heads of the PSU banks today to discuss the issue of non-performing assets (NPAs) and steps being taken by them to expedite the recovery of bad loans which have crossed Rs 6 lakh crore.

The US markets made a mixed closing in the last session, while the Nasdaq skidded, Dow climbed to record close. Goldman Sachs warning that rally in tech highfliers may be overextended, led the late hour selloff in tech pack. The Asian markets have made a similar start with some indices trading in red, as the technology companies have tumbled. Investors are also weighing France’s parliamentary elections, where the first round showed President Emmanuel Macron’s party headed for a majority.

Back home, recovering from day’s lows, Indian benchmark indices completed the last day of the week on optimistic note, as investors showed huge buying interests in Realty, Metal and Auto counters. Sentiments got a boost after Goods and Services Tax (GST) Council constituted 18 sectoral groups like telecom, textiles, gems and jewellery, e-commerce and mining, constituting officers both from the Centre and states to address sector-specific issues and assist in smooth roll-out of the new indirect tax regime from July 1, 2017. Some support also came with UN trade report that despite stagnant foreign direct investment (FDI) inflow of $44 billion in 2016, India will most likely remain most favoured destination due to its attractiveness among MNCs for cross-border mergers and acquisitions. Besides, India Met Department (IMD) has said that a low-pressure area would form in the Bay of Bengal in the next two days, boosting prospects of accelerated progress of the monsoon, also supported the sentiments. However, global market sentiment took a hit after UK elections left no single party with a clear claim to power ahead of talks to exit the European Union (EU), sideswipe investors who had already weathered major risk events in the United States (US). Further, market participants also remained anxious as a survey by the Reserve Bank of India showed that the economy will gradually consolidate growth in the current fiscal. The survey enlightened that real gross domestic product (GDP) and real gross value added (GVA) are expected to grow by 7.4% and 7.2%, respectively, in 2017-18 and consolidate further by 40 basis points (bps) and 50 bps, respectively in the following year. According to the forecasters, retail inflation is expected to gradually rise to 5% by the fourth quarter of 2017-18. Finally, the BSE Sensex gained 48.70 points or 0.16 % to 31262.06, while the CNX Nifty was up by 21 points or 0.22% to 9,668.25.