Markets likely to see some recovery with a mildly flat start

The Indian markets slumped in the last session, deposing over a percent, amid heavy selling in consumer stable stocks after the GST council increased compensation cess on cigarettes. Today, the start is likely to be flat-to-green, some recovery can be seen on positive regional cues and some good domestic earnings announcements. Meanwhile, NITI Aayog Vice Chairman Arvind Panagariya has said that India’s GDP could rise to about $8 trillion over the next 15 years if the country registers an economic growth of 8 per cent annually and come very close to eliminating abject poverty entirely. Traders will also be getting some support with rating agency Fitch’s latest report stating that new indirect tax regime Goods and Services Tax (GST) is likely to be beneficial for auto, cement and organised retail sectors, but will have a negative impact on oil and gas, and SME sectors. There will be some buzz in the pharma stocks, on report that the government is looking at introducing a new National Pharmaceuticals Policy and is already in the process of working out details. The oil & gas stocks too will remain in action, as the government is likely to consider the sale of government's 51.11 per cent stake in Hindustan Petroleum Corp Ltd (HPCL) to Oil and Natural Gas Corp (ONGC) for over Rs 28,000 crore. There will be lots of scrip specific actions based on the June quarter earnings announcements.

The US markets made another mixed closing in the last session, trade remained lackluster as traders expressed uncertainty about the near-term outlook for the markets after the Dow and S&P 500 reached record highs. The Asian markets have made mostly a positive start, though some are mildly in red, as investors weighed the potential for tepid economic growth.

Back home, Tuesday turned out to be a daunting session of trade for Indian equity benchmarks where frontline gauges ended with a cut of around a percent, breaching their crucial 31,800 (Sensex) and 9,850 (Nifty) levels, as market participants opted to book profit at record levels. Markets started the session on pessimistic note, as traders remained concern with the industry body Associated Chambers of Commerce & Industry of India’s (ASSOCHAM) latest report stating that the inflation outlook is expected to remain quite muted at least till festival season of Durga Puja and Diwali. Adding to the pessimism, a private report showed that India’s Current Account Deficit (CAD) is likely to widen to 1.3% of GDP in 2017 from 0.6% in 2016, largely owing to stronger domestic growth in the second half of this year. The report highlighted that the import demand is expected to resume once GST disruptions settle down after July. The report said lower commodity prices and adverse base effects will continue to cap the year-on-year growth rates in second half of 2017, partly offsetting the continued recovery in advanced economies. Besides, some concerns also spread among the inventors with Fitch Ratings’ latest report that new indirect tax regime GST will have a negative impact on oil and gas, and SME sectors. Investors shrugged off private survey stating that Indian CEOs are confident about the growth prospects of the country over the next three years, compared to that of global economy. Meanwhile, the Supreme Court granted one week’s time to the Reserve Bank of India (RBI) to respond to a report of a committee appointed to deal with bad loans with banks that have crossed Rs 8 lakh crore. Finally, the BSE Sensex declined 363.79 points or 1.13% to 31,710.99, while the CNX Nifty was down by 88.80 points or 0.90% to 9,827.15.