Markets to make a weak start on feeble global cues

The Indian markets after a choppy session managed a flat but positive closing in the last session. Today the start is likely to be weak on feeble global cues and lacking any positive trigger on the domestic front.  Markets however, may get some support with a report by real estate consulting firm CBRE South Asia that India has surpassed China in the global Retail Development Index in 2017, indicating growing prominence of the country as a preferred retail destination for global brands. Also, it has been reported that  on improved efficiency in granting construction permits, starting a business and resolving insolvency is expected to improve India’s overall ranking in the World Bank’s ‘ease of doing business’ survey 2018. Meanwhile, the government gave some relief to taxpayers availing of transitional input tax credit under the GST (Goods and Services Tax) regime by giving them an extra week till 28 August 28 to file tax returns. The pharma stocks will continue buzzing on reports that the government has proposed to revamp the country’s drug pricing regulator National Pharmaceutical Pricing Authority (NPPA), allowing it to set prices of only essential medicines. The Draft Pharmaceutical Policy, 2017, which focuses heavily on prices of medicine, has proposed massive dilutions in the existing framework, which would give more control to the government over the operations of the NPPA.

The US markets suffered sharp sell-off in the last session with all the major averages deposing well over a percent each, on concerns about ongoing political turmoil in Washington, D.C. Traders also reacted negatively to the latest batch of earnings news and largely overlooked a report showing a bigger than expected drop in initial jobless claims in the week ended August 12th. The Asian markets mirroring the US markets have made an all red start with some indices declining by over a percent in early deals amid concern over a terrorist attack in Spain.

Back home, Indian equity benchmarks managed to keep their head above water in a choppy day of trade and settled with modest gains. Markets swung in both directions as investors remained cautious with private report stating that retail and wholesale inflation accelerated in July and the uptrend is likely to continue in the coming months, limiting the space for further monetary easing. Though markets traded mostly in green during the session, as traders took some encouragement 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. The government has revised upward the country’s overall food grain production by 2.3 million tonnes (MT) to a record 275.68 MT in 2016-17 crop year that ended in June. Adding to the optimism, American think-tank Council on Foreign Relations’ Senior Fellow for India Alyssa Ayers said that the country has emerged as a strong world power but still has ‘a long way to go’. Reports that Mutual funds managers pumped more than Rs 30,000 crore in the stock markets during April-July of the current financial year because of strong participation from retail investors, too contributed to the gains. However, markets pared most of their gains in dying hour of trade with report that the overwhelming presence of public sector is holding back the Indian economy. Investors also took cues from minutes from the last meeting of Monetary Policy Committee (MPC) whose members said easing inflation had supported the need for a rate cut at its August meeting, but warned consumer prices could start accelerating. Finally, the BSE Sensex gained 24.57 points or 0.08% to 31,795.46, while the CNX Nifty was up by 6.85 points or 0.07% to 9,904.15.