Markets to make a mildly green start on positive global cues

The Indian markets recovering from the early choppiness rallied in the last session, and the major averages posted gains of over a percent on getting some good macro data. Today, the start is likely to remain in green and the markets will be adding gains on supportive global cues. On the domestic front traders will be getting some support with the government raising estimate on food grain output for the crop year ended June on an increase in the estimated yields of paddy and wheat. Traders will also be reacting to minutes from the last meeting of Monetary Policy Committee whose members said easing inflation had supported the need for a rate cut at its August meeting, but warned consumer prices could start accelerating. Meanwhile, American think-tank Council on Foreign Relations’ Senior Fellow for India Alyssa Ayers has said that the country has emerged as a strong world power but still has 'a long way to go'. There will be some cautiousness too, with Sebi asking BSE and NSE to initiate audit on 100 out of 331 suspected shell companies, in which the regulator had restricted trading recently.  The Tata group stocks will be buzzing today, as the board of Tata Sons under has ordered its group companies to scrap all business dealings with Cyrus and Shapoor Mistry’s SP Group.

The US markets moved higher in the last session, , with the Dow Jones Industrial Average up for a fourth day despite political turmoil in Washington DC. There was some cautiousness with minutes from the Federal Reserve that showed that the central bank is contending with sluggish inflation. The Asian markets have made mostly a positive start led by technology shares, however, the Japanese market was in red after the yen jumped and the dollar extended a decline after Federal Reserve meeting minutes reduced the odds of another U.S. interest rate increase this year.

Back home, coming out from the initial choppiness, Indian equity benchmarks staged splendid performance on Wednesday, extending their northward journey for second straight session to end near their crucial 9,900 (Nifty) and 31,800 (Sensex) levels. Markets traded drearily in early deals, as traders remained concerned with wholesale inflation rising to 1.88 percent in July as prices of some commodities increased in the first month of Goods and Services Tax (GST) rollout. Higher Retail inflation too dampened traders’ mood as it rose to 2.36% in the month of July. However, key gauges gathered momentum in afternoon session and started moving northward, as traders took some encouragement with statements by the Prime Minister Narendra Modi who on 70th Independence Day promising to lead the country on a new track of economic progress, said his government would intensify the fight against black money and corruption. Adding to the optimism, India’s trade deficit narrowed to $11.45 billion in July from a month ago, following a slowdown in merchandise imports. Also, recording a growth of over 3.9 percent on the back of a healthy rise in shipments of engineering goods, petroleum products and chemicals, Indian exports in July grew at $22.5 billion. Market extended their rally and ended near intraday high levels on report that Markets regulator SEBI notified relaxed norms for stake purchase in distressed listed companies by lenders, exempting them from making open offers for shareholders. The relaxation will be subject to certain conditions, including shareholders’ approval of the stake acquisition by way of special resolution. Some support also came with a foreign brokerage report highlighting that India’s growth momentum will get stronger with revival in private investment cycle and real GDP growth is expected to average at about 7.4 percent over 2017 and 2018. It also termed as faulty the argument that a 7.5-8 percent real GDP growth in the next few years will still be lower than what was achieved in the boom period of 2006-2008. Finally, the BSE Sensex soared 321.86 points or 1.02% to 31,770.89, while the CNX Nifty was up by 103.15 points or 1.05% to 9,897.30.