Markets to make a flat but positive start

The Indian markets made a jubilant start of the new week, coming from a cautious start the benchmarks posted handsome gains, reaching new record highs in the last session. Today, the start of the new month is likely to be in green though traders will be eyeing the RBI’s policy review meeting starting from today. Also the July Manufacturing readings too will be released later in the day. Traders may get some support with report that the collection of Integrated Goods and Services Tax from imports crossed Rs 20,000 crore in July - the first month of the roll out of the new indirect tax regime. In other positive, global rating agency Moody’s has reported that India's GDP growth will remain in the range of 6.5-7.5 percent over the next 12-18 months and GST will support the momentum for faster growth. Meanwhile, Prime Minister Narendra Modi met with his party MPs from several states, and emphasised the need to ensure continuance of the 'benefit chain' under GST. The prime minister also asked small businesses and traders to register under the recently rolled out goods and services tax. There will be some cautiousness in the markets too, as the growth of eight core sectors slowed to 0.4% in June due to contraction in output of coal, refinery products, fertiliser and cement.  The growth rate of eight infrastructure sectors was 7% in June last year. The oil marketing companies will keep buzzing, as the government has asked oil marketing companies to raise the prices of subsidised cooking gas by Rs 4 per cylinder every month. The aviation stocks may see some action as Boeing is betting big on India saying that it is the highest growth market in world. There will be lots of important earnings and auto stocks will be in focus on reporting their monthly sales number.

The US markets once again showed a lackluster trade and made another mixed closing in the last session, but despite the choppy trading, the Dow reached another new record closing high. Traders seemed reluctant to make significant moves ahead of the release of the monthly jobs report on Friday. The Asian markets have made mostly a positive start supported by Chinese manufacturing and South Korean export data. The Japanese stock market too has rebounded, with the increase in commodity prices lifting resources stock.

Back home, Indian equity benchmarks ended the splendid performance with a gain of over half a percent on Monday, settling at fresh all time closing high levels. Key gauges traded firmly throughout the session and ended above their crucial 10,050 (Nifty) and 32,500 (Sensex) levels amid rate cut optimism. Market participants expects the Reserve Bank of India (RBI) to cut rates by 25 bps on falling inflation in the coming policy meet, which will start tomorrow. Meanwhile, ahead of the next monetary policy review, Reserve Bank Governor Urjit Patel on Friday called on Finance Minister Arun Jaitley and is believed to have discussed various macro-economic issues. Traders also took some encouragement with Finance Minister Arun Jaitley’s statement, who underlining the government’s push on reforms has said that in the last three years, the prime minister has been forcing one or two important changes. India has to become a country where it is easy to do business and the businesses are done in the most ethical way. Adding to the optimism, Prime Minister Narendra Modi highlighted the success of the Goods and Services Tax (GST) Bill and said it has transformed the economy. Terming the GST as pro-poor and an example of cooperative federalism, he said the government’s effort is to ensure there is no extra burden on the poor. Markets extended their northward journey in second half as market participants got some boost on report that India’s exports of engineering goods to China saw a whopping 123 percent growth at $629 million during April-June this fiscal, driven by an upsurge in shipments of non-ferrous metals. The country’s shipments to China stood at $282 million in the April-June quarter of the previous fiscal. Finally, the BSE Sensex surged 205.06 points or 0.63% to 32,514.94, while the CNX Nifty was up by 62.60 points or 0.63% to 10,077.10.