Markets to make a soft-to-cautious start on sluggish global cues

The Indian markets despite slowing down in the final hours managed gains of about half a percent in last session. Today, the start may remain cautious on sluggish global cues, however there will be some support to the markets in latter trade with report that net direct tax collection grew by 14.8 per cent to Rs. 1.42 lakh crore at the end of first quarter on account of surge in advance tax payments. As per the finance ministry the net direct tax collection represents 14.5 per cent of the total Budget Estimates of direct taxes of Rs 9.8 lakh crore for 2017-18. Meanwhile, Finance Minister Arun Jaitley has said that the rollout of the Goods and Services Tax has been smooth, without causing much disruption. He said the economy has not been disrupted and we don’t expect any disruption ahead, refuting critics who had thought that the GST rollout would impact trade and industry. Markets are also likely to get some support with Labour Minister Bandaru Dattatreya’s statement that the retirement fund body EPFO's investment in stocks through exchange traded funds (ETFs) would cross the Rs 45,000-crore mark by the end of this fiscal. There will be some buzz in the PSU banking stocks on report that the government is likely to infuse more money in state-run banks amid a crackdown on bad loans and increasing capital needs under Basel III guidelines. The exact amount will be decided after the first quarter earnings of banks are available.

The US markets extending their sluggishness deposed around a percent in last session, following the release of a report from payroll processor ADP, showing weaker than expected private sector job growth in the month of June. The Asian markets have made mostly a lower start with some indices declining by around half a percent in early deals. Japanese market was down tracking the weak cues overnight from Wall Street as well as rising global bond yields.

Back home, Indian stock markets witnessed a fairly stable day of trade on Thursday, as sanguinity got reinforced after minutes from the Federal Reserve’s last meeting showed a lack of consensus on the future pace of interest rate increases. Wednesday’s optimism got spilled over into the Thursday’s session helping the frontline indices in extending the winning momentum for second successive session, as sentiments got a boost after International Monetary Fund’s (IMF’s) report that India’s growth outlook has improved as the impact of last year’s demonetization exercise seems to be fading and recent key structural reforms continue to pay off. Besides, hopes of positive quarterly earnings and smooth roll-out of the goods and services tax (GST) also lifted sentiment. Some support also came with a private report indicated that Indian economy is expected to recover in the coming quarters and the country is expected to clock a real GDP growth of 6.9 percent in this financial year. The report also noted that the negative effects from the demonetization measure is already wearing off, and the Indian economy will likely benefit from positive demographic trends, greater external stability (due to improved terms of trade from low oil prices), and continued reforms that should help to improve the country’s admittedly poor business environment. Investors’ morale remained upbeat as Finance Minister Arun Jaitley said that despite the anticipation of initial disruptions on account of the GST, the rollout of the new indirect tax regime from July 1 was smooth and without any significant glitches. Meanwhile, PSU Banking stocks gained traction after brokerage houses upgraded leading PSUs such as Bank of Baroda and Punjab National Bank as valuations turned reasonable after recent correction on NPA concerns. Finally, the BSE Sensex gained 123.78 points or 0.40% to 31369.34, while the CNX Nifty was up by 36.95 points or 0.38% to 9,674.55.