Markets to make a cautious start on mixed global cues

The Indian markets despite the technical glitch at NSE which disrupted trade at the premier bourse for almost half of the day, managed to reach their highest levels in last session. Today, the start is likely to be a bit cautious on mixed global cues. On the domestic front there will be some concern with a terror attack on Amarnath pilgrims in Kashmir. Meanwhile, IMF chief Christine Lagarde, warning against complacency in the current phase of global economic recovery has asked the members of G20 group, which includes India, to step up reforms by reducing trade barriers and subsidies to promote a level playing field. The auto sector stocks will be in somber mood on SIAM’s report that domestic automobile sales saw a muted growth of one per cent in June as the passenger vehicle (cars, utility vehicles and vans) segment declined more than 11 per cent. A four per cent growth in two-wheelers, however, helped the industry remain in the green. Sugar stocks too will be in action, as the government has hiked the import duty on sugar from 40 per cent to 50 per cent, to check cheap imports. Cheaper imports have been adversely affecting domestic sugar mills.

The US markets turned into mood of consolidation and posted modest gains in last session after initially showing a lack of direction, traders remained cautious ahead of Federal Reserve Chair Janet Yellen’s semiannual testimony before Congress. The Asian markets have made a mixed start, while some of the indices are up by about half a percent others are modestly in red on low trading volumes, as investors awaited a potential new catalyst for further moves.

Back home, Monday turned out to be a fabulous day of trade for Indian equity markets, with bulls tightening their grip with frontline indices ending at all time closing highs. Sensex surpassed its crucial 31,700 level, while Nifty50 achieved 9,750 mark for the first time ever despite trading remained shut on NSE in cash and F&O segment for 3 hours in the morning trade due to a technical glitch. Markets traded jubilantly throughout the session on report that Associated Chambers of Commerce and Industry of India (Assocham) said that the Goods and Services Tax (GST) will boost the competitiveness of micro, small and medium enterprises (MSMEs). Traders also took some encouragement after Prime Minister Narendra Modi, noting that the GST, which was implemented last week, was the biggest tax reform in the last 70 years has said it would help businesses and create a unified market of 1.3 billion people. Modi also underlined support for free and open trade regime of World Trade Organization (WTO). Adding to the optimism, Union minister Mukhtar Abbas Naqvi said that the new tax regime would prove to be a game changer for the country’s economy, terming the GST a revolutionary reform taken in the interest of common people and small traders. The introduction of the new tax system by the Narendra Modi Government was the biggest economic reform since the Independence. Some support also came with reports that Foreign Portfolio Investment (FPI) inflows during the period between January-June 2017 (H12017) stood at nearly $23 billion into the Indian capital markets, largely driven by several factors, including expectations from the government that it would speed up development and economic reforms. Finally, the BSE Sensex surged 355.01 points or 1.13% to 31,715.64, while the CNX Nifty was up by 105.25 points or 1.09% to 9,771.05.