Markets to make a soft start on heightened geopolitical tension

The Indian markets after a steady day of trade ended with decent gains in the last session and the major benchmarks reclaimed their crucial levels. Today, the start is likely to be a bit soft and the markets may give up some of their last session gains, with geo-political worries weighing down the domestic sentiments too. Though, on the domestic front traders will be getting some relief with the Doklam military stand-off ending peacefully ahead of the BRICS summit, underscoring a diplomatic victory for India and the Modi government. Also, there are reports that the government is unlikely to change the financial year to January-December, though it is considering whether it could further advance the date of the presentation of the Budget by a fortnight or so. Meanwhile, Moody’s Investors Services in its latest note has said that merging India’s public sector banks will improve their ratings because it will provide efficiencies of scale and enhance the quality of corporate governance. There will be some cautiousness in the markets with a NITI Aayog report that has found that there is a huge gap between what the state governments have done to improve ease of doing business and what the enterprises know of these improvements. NITI Aayog has recommended reforming labour laws and a greater flexibility in their implementation to enhance ease of doing business. There will be some buzz in the telecom stocks as the Telecom Regulatory Authority of India (TRAI) has released a consultation paper on the next round of spectrum auctions seeking stakeholders’ response. Some action can be seen in the iron stocks too, on report that stockpiles of iron ore in the country have swollen due to the imposition of 30 per cent export duty.

The US markets once again made a mixed closing in the last session after going through a lackluster day of trade, as traders were looking ahead to the release of key economic data in the coming days, with monthly jobs report in focus. The Asian markets have made a weak start and some of the indices are down by around a percent on heightened geopolitical tension after North Korea fired a ballistic missile over Japan, promising to fan simmering tensions with the US.

Back home, extending northward journey for fourth straight day, Indian equity benchmarks ended the session with a gain of around half a percent, recapturing their crucial 9,900 (Nifty) and 31,700 (Sensex) levels. Sentiments remained jubilant through the session and key gauges after a gap-up opening traded in fine fettle. Sentiments remained up-beat since morning with industry body Assocham’s statement that biometric cards have facilitated disbursement of as much as Rs 83,184 crore to beneficiaries of Direct Benefit Transfer (DBT) schemes without the notorious leakages of the past. Traders also took some encouragement with Finance Minister Arun Jaitley’s statement that the Pradhan Mantri Jan Dhan Yojana and the related Jan Dhan- Aadhaar and Mobile number (JAM) trinity has the potential to link all Indians into one common financial, economic, and digital space. Adding to the optimism, Niti Aayog said that India has good prospects of achieving over 8 percent growth within 2-3 years and the chances of massive cut in the poverty rate in the upcoming decade are excellent. Meanwhile, a private poll enlightened that India’s economic growth likely accelerated to 6.6 percent in the quarter just ended, but analysts are sounding increasingly worried that confusion over a new goods and services tax will dampen activity in coming months. However, markets lost some of their gains in second half of the trade to end off day’s highs, as European shares fell in a broad sell-off as the euro strengthened after ECB chief Mario Draghi did not express concern about a strong currency in a closely watched speech. Asian markets closed mixed. Finally, the BSE Sensex gained 154.76 points or 0.49% to 31,750.82, while the CNX Nifty was up by 55.75 points or 0.57% to 9,912.80.