Markets to remain cautious at start, may see some recovery in latter trade

The Indian markets reversing all their early gains witnessed another sharp sell-off in the last session, dragged down by Infosys and deposing close to a percent again. Today, the start is likely to remain cautious on mixed global cues and some further downside can be expected before markets show some strength. Traders will be getting some support with DIPP’s report that FDI flow into the country grew 37 per cent to $10.4 billion during the first quarter of this financial year. India received $7.59 billion FDI during April-June 2016-17. Meanwhile, Prime Minister Narendra Modi is slated to interact with 200 CEOs to attain their views and suggestions to carry forward the 'New India' initiative. The two-day discussion involves groups consisting of around 35 industry leaders and government secretaries, who will deliberate on an array of topics, namely- New India by 2022, Make in India, Cities of Tomorrow, World Class Infrastructure, Doubling Farmers Income and Fixing Finance: Reporting the Financial Sector. However, there will be some cautiousness too, with a survey stating that consumer confidence in India declined in the second quarter of this year amid concerns regarding job security and lower optimism on employment prospects. Oil & gas sector stocks will be in action, as the government has clarified that upstream oil and gas companies can avail an input tax credit (ITC) on Goods and Services Tax paid only on the value added products that are manufactured and covered under GST.

The US markets extending their sluggishness made a mixed closing in last session and major averages showed a lack of direction over the course of the trading session, with traders continuing to express concerns about President Donald Trump's ability to implement his pro-business agenda. The Asian markets have made mostly a positive start and the Japanese market too was showing modest gains as the yen snapped four days of gains and investors reassessed positions ahead of a meeting of central bankers.

Back home, Indian equity benchmarks failed to hold on to their initial gains and ended in red terrain on Monday, breaching their crucial 9,800 (Nifty) and 31,300 (Sensex) levels, as weak global cues and fall of over 5% in Infosys continued to hurt sentiments. Markets, soon after a positive opening, started moving southward to enter into negative trajectory in second half of trade. Afterwards, key gauges never looked confident of recovering and gradually extended its losses till end to close near intraday lows, as investors opted to remain on sidelines ahead of the PM Narendra Modi’s meet with industry leaders for policy inputs to build a ‘New India’. Sentiments remained dampened after the private report highlighted that consumer confidence in India declined in the second quarter of this year amid concerns regarding job security and lower optimism on employment prospects. Besides, cautionary spending by consumers towards the end of 2016 still had some impact on the quarter under consideration. Adding to the pessimism, the India Meteorological Department’s (IMD) weekly press release highlighted that about a quarter of the country has received deficient rainfall in the first half of the monsoon, but hopes the situation will improve in the second half. The Met department states that there is a 4% deficit rain across the country, but 26% part of the country has received deficient rain. Markets extended losses on report that as many as 322 infrastructure projects worth Rs 150 crore or above each have seen cost overrun of Rs 1.71 lakh crore due to delays and other reasons by March 2017. Furthermore, according to the RBI data during the week to August 4, there was an incremental credit de-growth of Rs 1.1 trillion. This comes after a record low full year credit growth in FY17 when credit growth slipped to the lowest in the past six decades at 5.1%. This was the lowest since fiscal 1953 when it grew a tepid 1.8%.Finally, the BSE Sensex lost 265.83 points or 0.84% to 31,258.85, while the CNX Nifty was down by 83.05 points or 0.84% to 9,754.35.