The Indian markets gained life in the final hour of trade in the last session and managed to end in green on firm global cues and rate cut hopes. Today, the start of the crucial day is likely to be in green on sanguine global cues, though all eyes will be on RBI’s policy decision to be announced later in the day, which will decide the further course of action for the markets. With retail inflation receding to record low levels, the six-member monetary policy committee (MPC), headed by RBI Governor Urjit Patel is likely to cut the benchmark lending rate by at least 0.25 percent in its third bi-monthly monetary policy review. Traders will be getting some support with Minister of State for Finance Santosh Kumar Gangwar’s statement that the government has collected over Rs. 1.80 lakh crore in direct tax till July 15 in the current fiscal, an increase of 21.4 per cent year-on-year, "belying" fears of slowdown in economic activities. The current growth rate is higher than the target rate of 15.32 per cent required to achieve the Budget Estimate. Meanwhile, Finance Minister Arun Jaitley has said that the GST Council, at its next meeting later this week, will finalise a mechanism to operationalise anti-profiteering clause which seeks to protect consumers’ interest. GST Council comprising state finance minister will meet on August 5 to take stock of implementation of GST which was rolled from July 1. There will be lots of important earnings announcements to keep the markets in action today.
The US markets despite remaining lackluster posted modest gains in the last session and the Dow reached another new record closing high. There was some positivity with traders continuing to react to the latest batch of earnings news, with most corporate results exceeding estimates. The Asian markets have made mostly a positive start led by the technology stocks after results from Apple Inc. buoyed sentiment in the sector.
Back home, buying in last leg of trade comes as the saving grace for the markets and helped them to settle at fresh record closing highs, with Nifty surpassing its crucial 10,100 mark, as traders remained optimistic ahead of outcome interest rate decision from two-day Monetary Policy Committee meeting that started today. The street is expecting a rate cut of at least 25 basis points by RBI tomorrow. Markets traded with huge volatility throughout the day, with frontline gauges swinging between green and red for most part of the day, but bulls which woke up in dying hour of trade mainly supported the markets to hit another record high. Traders also took encouragement 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. Adding to the optimism, 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. However, gains remained capped as some cautiousness crept in the markets after 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. Some anxiety also spread among the investors, as PMI survey data indicated that the introduction of the goods & services tax (GST) weighed heavily on the Indian manufacturing industry in July. The Nikkei/IHS Markit Manufacturing Purchasing Managers’ Index fell to 47.9 in July from June's 50.9, its first reading below the 50 mark that separates growth from contraction since December and its lowest reading since February 2009. Some concerns also came with the report that investments in the domestic capital market through participatory notes (P-notes) slumped to Rs 1.65 lakh crore in June amid stringent norms put in place by Sebi to curb the inflow of illicit funds. Finally, the BSE Sensex gained 60.23 points or 0.19% to 32,575.17, while the CNX Nifty was up by 37.55 points or 0.37% to 10,114.65.
