Markets to see some rebound with a positive start

The Indian markets ended lower in the last session making it a week of losses by declining for the fifth consecutive trading session. Today, the start of the holiday truncated week is likely to be in green tailing the recovery in the global markets and some stability can be seen with the progress of the trade. Traders will be getting some support with outgoing Niti Aayog Vice Chairman Arvind Panagariya’s statement that resolution of bad loans in the banking system is on 'right track' and will 'open the door' to rapid credit expansion and growth. He added that so banks will be better equipped to lend and on the sides of borrowers there will be greater appetite. Traders will also be getting some support with a private report that the Indian economy is at the cusp of entering its strongest growth phase and a full blown bull market is yet to play out with the wide-based Nifty expected to touch 11,500 in 2018. Though, traders will be reacting negatively to report that India's industrial production fell to four-year low of 0.1 per cent in June as manufacturers reduced inventories ahead of the GST rollout. Now all eyes will be on the inflation data, as both Consumer Price Index (CPI) and Wholesale Price Index (WPI) inflation data will be released later in the day. Telecom stocks will be buzzing as the telecom regulator RS Sharma has said that recommendations on contentious interconnect usage charge should be finalised by August end. There will be some important earnings announcements too, to keep the markets in action.

The US markets made a minor bounce back in the last session and all the major averages managed a positive close, mainly on bargain hunting and report of modest uptick in consumer prices in the month of July. The Asian markets have made mostly a positive start with tensions between the US and North Korea showing signs of easing, though the Japanese market was lower as the yen strengthened against the dollar.

Back home, Friday turned out to be a nightmarish session of trade for Indian equity benchmarks with frontline gauges shaving off over a percentage point. Domestic equities witnessed a huge bloodbath, as bears took charge resulting key indices fell below their psychologically important 31,300 (Sensex) and 9,750 (Nifty) levels, respectively, as stock markets across the world went into a tailspin amid an ongoing escalation in tensions between the US and North Korea. Markets made a pessimistic start, as traders remained concerned over SEBI’s crackdown on shell companies and a stand-off in the Doklam area of the Sikkim sector between Indian and Chinese troops. Sentiments also remained dampened with report that the Reserve Bank of India (RBI) has halved its dividend payout to the government to Rs 30,659 crore for the fiscal ended June 2017. Last fiscal, the RBI had transferred Rs 65,876 crore surplus as dividend to the government. This would potentially impact the government’s fiscal math this financial year, which is under pressure due to state-run banks’ sluggish earnings growth. Markets tried to pare some of their losses but another wave of selling in second half of trade dragged markets to intraday lows. Sentiments weighed on report that there were downside risks to India’s projected growth of 6.75-7.5 percent growth in 2017-18, the finance ministry’s Mid-Term Economic Survey said in a guarded forecast, indicating that multiple pain points continue to hinder growth in the broader economy amid an uncertain fiscal outlook. The second part of the Economic Survey for 2016-17, which besides giving an overview of India’s economy, was also critical about ad hoc state-sponsored farm loan write-offs to deal with rural distress. Separately, flows from foreign portfolio investors into India have slowed of late as rich valuations and delay in corporate earnings recovery have reduced their appetite for domestic stocks. Finally, the BSE Sensex tumbled 317.74 points or 1.01% to 31,213.59, while the CNX Nifty was down by 109.45 points or 1.11% to 9,710.80.