Markets to make a flat-to-cautious start on muted global cues

The Indian markets after dilly-dallying throughout the day ended in red in the last session. The major laggards were IT and tech stocks on news that Cognizant Technology Solutions is on a downsizing spree. Today, the start is likely to remain somber on muted global cues. Markets though will be getting some support with Central Board of Direct Taxes (CBDT) report of a 25 percent increase in the number of Income Tax Returns (ITRs) filed in the current fiscal, on the backdrop of economic reform, including demonetisation and the Income Tax Department`s (ITD) Operation Clean Money. There will also be some buzz in the markets with Sebi allowing brokers to offer a margin funding facility that does not mandate clients to bring cash upfront to initiate a leveraged trade. Investors can now buy shares by pledging their stock portfolio with stock brokers. There coal and mining sector stocks will be buzzing, as the government has annulled the fifth round of coal mines auction due to poor response from bidders. The tyre stocks too will be in action, as the government may impose anti-dumping duty of up to $452.33 per tonne on a certain variety of Chinese pneumatic radial tyres to guard domestic players from cheap imports. There will be lots of important earnings announcements too, to keep the markets ticking.

The US markets closed higher in the last session, with the Dow climbing to a new record closing high for the ninth consecutive session.  The gains reflected ongoing positive sentiment following last Friday's upbeat monthly jobs report. The Asian markets have made a mixed start, though some indices are still trading near their 2007 high, while Korea and Japan reversed their earlier gains.

Back home, Indian equity benchmarks ended the lackluster day of trade marginally in red on Monday, with frontline gauges swinging between green and red for most part of the day. Market traded near neutral lines throughout the session amid lack of any major domestic cues, but selling in dying hour of trade mainly dragged the key gauges in red terrain. Traders opted to remain on sidelines on concerns that factors such as positive earnings and hopes of an improving economy were already factored into prices. Sentiments also remained dampened on ASSOCHAM’s report that with the external value of the Indian rupee superseding its internal strength despite lower inflation, the resultant mismatch and the continuing trend is hurting exporters, whose competitive edge gets directly hit with the declining value of the dollar against the domestic currency. However, losses remained capped as traders took some solace with the government’s statement that rollout of goods and services tax (GST) by and large has been smooth and it has deployed a large number of senior officials to regularly review the working of the new indirect tax regime. Separately, after one month of the implementation of GST, the collections from customs duty and Integrated-GST (IGST) from imports has almost doubled to Rs 30,000 crore in July. The July collections compare to indirect tax collection of over Rs 16,000 crore of the same month of 2016. Some support also came with NITI Aayog Member Bibek Debroy’s statement that it is not reasonable to connect the GST regime with slowdown in manufacturing output as the issues that the sector is facing goes beyond the tax reform. He also said that these are very temporary things which they don’t need to worry about because it is a blip that will go away once the transition is complete. Finally, the BSE Sensex declined 51.74 points or 0.16% to 32,273.67, while the CNX Nifty was down by 9.00 points or 0.09% to 10,057.40.