Markets to make a cautious start amid mixed global cues

The Indian markets despite paring most of their gains managed a modestly positive close in last session; traders turned cautious ahead of key macro data. Today, the start is likely to remain cautious amid mixed global cues and the traders will be eyeing the IIP and inflation data to be announced after the market hours today. Traders though will be getting some support with statement of Revenue Secretary Hasmukh Adhia that the Goods and Services Tax (GST) will help bring down the inflation by one to two percent by the end of this year. He also said that the government`s objective is to ensure that inflation does not increase, and added that the government has tried to keep items frequently used by the consumers under the lower tax bracket. There will be some buzz in the banking stocks on report that the finance ministry is gearing up to introduce a host of Bills, including the Banking Regulation (Amendment) Bill, repeal of State Bank of India (Subsidiary Banks) Act, 1959, among others, in the upcoming Monsoon Session. The aviation stocks too will see some action on a report from ICRA that the domestic air passenger traffic in India crossed the 10-million-mark (in a single month) for the first time in the history of Indian aviation during the month of May 2017.

The US markets continued their lackluster trade and made another mixed closing in the last session, as traders remained reluctant to make significant moves ahead of Federal Reserve Chair Janet Yellen's semiannual testimony before Congress. The Asian markets have made a mixed start too and some of the indices are marginally in red, as attention turned to central bank policy and the start of corporate earnings season in the US.

Back home, Indian equity benchmarks, paring most of their early gains, managed to settle at new all time closing highs with modest gains on Tuesday. Markets started the day on optimistic note and extended their northward journey to attain crucial 31,800 (Sensex) and 9,800 (Nifty) bastions, as investors expect inflation for the month of June to be at record low which could lead to a rate cut in the next monetary policy review. According to a private report, easing further from May’s 2.18%, Consumer price inflation (CPI) for June is predicted to cool to 1.70%, below the RBI’s medium-term target of 4% for the eighth successive month. The CPI is slated to be announced tomorrow. Traders also took some encouragement with India Meteorological Department’s (IMD’s) statement that the seasonal monsoon rains have covered most of India and the amount of precipitation so far is within expectations, raising hopes for higher farm output after increased sowing of rice and soybean crops. Adding to the optimism, Revenue Secretary Hasmukh Adhia enlightened that the Goods and Services Tax (GST) will help bring down the inflation by one to two per cent by the end of this year. The secretary said that the government’s objective is to ensure that inflation does not increase, and added that the government has tried to keep items frequently used by the consumers under the lower tax bracket. However, it was the last hour of trade which played spoil sports for the markets and traders opted to book most of their initial gains at higher levels. 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. Finally, the BSE Sensex gained 31.45 points or 0.10% to 31,747.09, while the CNX Nifty was up by 15 points or 0.15% to 9,786.05.