Markets to make a weak start on feeble global cues

Indian shares gave up early gains to end on a flat note on Thursday on the eve of F&O contract expiry. Today, the start is likely to be in red on weak global cues. On the domestic front, traders will be eying Goods and Services Tax (GST) roll out on midnight today. Market participants will also remain concerned after Asian Development Bank said that implementation of Goods and Services Tax (GST) will remain a challenge for the government, as here can be some transitional issues like filing of returns and its scrutiny. Another issue might be that of enforcement by state and central government tax officials. However, traders will get some support with Industry body Ficci’s statement that GST will bring about significant gains to India’s economy and it looks forward to working with the Government for successful implementation of the crucial tax reform. Meanwhile, the Department of Industrial Policy and Promotion (DIPP) is holding consultations with industry on revamping the country's manufacturing and industrial policy. Stocks related to construction sector will be in focus after the government hiked the GST rate for construction of complex, building, civil structure, including a complex or building intended for sale to a buyer, wholly or partly, to 18 per cent from 12 per cent. GST, however, will not be imposed on fully constructed properties, where completion certificate as been issued by competent authority. Telecom stocks will be buzzing with ICRA stating that intense competition and pricing pressure will continue to take a toll on the telecom sector with industry revenue expected to fall another 6 percent during the current financial year.

The US markets ended in red terrain on Thursday as traders shrugged off report showing stronger than previously estimated U.S. economic growth in the first quarter. The gross domestic product (GDP) climbed by 1.4 percent in the first quarter compared to the previously reported 1.2 percent increase. Asian markets were trading mostly in red despite China manufacturing activity beating expectations as select tech shares around the region sold off.

Back home, Indian stocks markets showed a volte-face on the final day of June F&O series, as what started on a promising note ended as a dismal show. The frontline indices pared most of intraday gains to close marginally in green, with the S&P BSE Sensex ending below its crucial 31,000 mark, while the Nifty50 settled just a tad above 9,500 mark. Sentiments got some support with the report that India's GDP growth witnessed a trough in January-March quarter, but going forward the economy is expected to see gradual improvement in growth numbers primarily driven by consumption. The report added that consumption has recovered from the demonetization shock and while external demand may be down, it remains supportive of growth. Some support also came with the report that investments in domestic capital markets via participatory notes (P-notes) have surprisingly surged to a seven-month high of Rs 1.81 lakh crore at the end of May despite stringent norms put in place by SEBI to curb inflow of illicit funds. According to Sebi data, total value of P-note investments in Indian markets - equity, debt and derivatives - increased to Rs 1,80,718 crore at May-end after hitting a four-month low of Rs 1,68,545 crore at the end of April. However, the sanguinity in local markets was under check as profit booking in Energy and Healthcare counters exerted downside pressure on the frontline indices and dragged them even below to the psychological 9,550 (Nifty) and 30,900 (Sensex) levels. Investors remained cautious after hawkish comments from major central banks signaled rate hikes and that the era of stimulus might be coming to an end. In Britain, Bank of England Governor Mark Carney surprised many by conceding a hike was likely to be needed as the economy came closer to running at full capacity. Further, some weakness also came with the private report indicating that Loan waiver schemes being doled out to farmers could have a significant impact on state government finances and pose risk of further fiscal slippages. Finally, the BSE Sensex gained 23.20 points or 0.08% to 30857.52, while the CNX Nifty was down by 12.85 points or 0.14% to 9,504.10.