The Indian markets suffered sharp sell-off in the last session, after capital market regulator SEBI directed exchanges to initiate action against 331 suspected shell companies. Today, the start is likely to remain somber on sluggish global cues and geopolitical worries will keep mounting pressure on the domestic markets too. Traders however may get some support with the government statement that job loss through automation in India should not be a matter of concern as the "growth momentum" of the economy will result in new job opportunities. Also, Union Power Minister Piyush Goyal has said that the newly-introduced Goods and Services Tax (GST) is crucial for promoting transparency and a corruption-free business environment in the country. Markets will get additional support with the India Meteorological Department (IMD), setting stage for a good kharif harvest and strong rural demand stating that monsoon rainfall is likely to remain normal in the remaining two months of the season. There will be some buzz in the sugar space, with report that India is planning to allow additional 200,000 tonnes of duty-free sugar imports, as production fell below consumption in 2016/17 marketing year ending on Sept 30. There will be lots of important earnings announcements too, to keep the markets in action today.
The US markets made a mildly lower closing in the last session that ended the Dow’s streak of setting new record closing highs for nine consecutive sessions. Geopolitical worries mainly weighed on the sentiments with remarks by President Donald Trump adding to concerns about rising tensions between the US and North Korea. The Asian markets have made mostly a lower start tailing the weakness in US markets, as investors took a risk-off approach after the US and North Korea exchanged threats amid escalating tensions between the two nations. Japanese market was down by over a percent as the yen and gold climbed.
Back home, Tuesday turned out to be a disappointing day of trade for Indian equity benchmarks, with Nifty and Sensex breaching their crucial 10,000 and 32,100 levels, respectively, after Securities and Exchange Board of India (SEBI) directed bourses to initiate action against 331 suspected shell companies that are listed and these scrips will not be available for trading this month. The regulators directive came after the Corporate Affairs ministry shared a list of 331 listed companies that are suspected to be shell entities and could even face compulsory delisting. Markets started the session with optimism but it soon fizzled out and both the domestic indices entered into red terrain, as traders turned cautious with the private report stating that it ‘suspects’ that there has been a change in the stance by the authorities to let the rupee appreciate more, but warned that it can hurt manufacturing and exports. Some concerns also came with Engineering exporters’ body EEPC stating that shipping companies are facing difficulties post GST as their drawback refunds will not be released till September-end or October. Meanwhile, the securitisation market has hit a record high of $1.02 trillion in fiscal 2017, helped by a surge in volume of pass-through certificates (PTCs). Traders failed to get any sense of relief 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. Traders also failed to get any solace 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. Finally, the BSE Sensex declined 259.48 points or 0.80% to 32,014.19, while the CNX Nifty was down by 78.85 points or 0.78% to 9,978.55.
