Markets to make a green start on positive regional cues

The Indian markets despite a lackluster trade in last session managed a modestly positive close. Today, the start is likely to be in green and some upmove can be expected in early deals supported by the good regional cues. Traders will be reacting to the outcome of the crucial meeting of the Goods and Services Tax (GST) Council that took place on Saturday, where the council cut GST rate for over 40 items of mass consumption. There will be some buzz in the auto sector stocks, as the GST Council raised the cess on motor vehicles--mid-size cars, large cars and sports utility vehicles-- by 2%, 5% and 7% respectively instead of whole 10% increase effected in the law, while keeping the overall tax incidence within 50%. There will be some action in the markets, as the investments in the domestic capital market through participatory notes (P-notes) slumped to a five-year low of Rs 1.35 lakh crore in July amid stringent norms put in place by Sebi. The power sector stocks too will remain in action, as Fitch Ratings in its report has said that India may produce surplus power in the current financial year but sporadic outages continue to plague the country and 24 per cent households are yet to be electrified.

The US markets once again made mostly a lower closing in the last session, booking another week of loses, as investors traded cautiously ahead of a potential missile test by North Korea and Hurricane Irma’s arrival on the Florida coast over the weekend. The Asian markets have made a green start and some of the indices are up by about a percent, as the hurricane Irma’s force waned and the United Nations prepared to vote on tougher North Korean sanctions.

Back home, Indian equity benchmarks somehow managed to keep their head above water and went home with slender gains on Friday. Though, markets started the session on optimistic note with report that capital markets regulator, the Securities and Exchange Board of India (Sebi) has proposed compulsory physical settlement in stock derivatives contracts and has sought comments from market participants in a discussion paper, as it is concerned over the suitability of derivatives for retail investors. Soon after the start, optimism got fizzled out and key gauges traded in very tight band, swinging between green and red for most part of the day. Traders turned cautious on report that Sebi imposed an Rs 2,423 crore penalty on PACL and its four directors for illegal fund mobilisation through various schemes that were used by the group to garner over Rs 49,000 crore from the public. Buying in dying hour of trade helped markets to settle slightly in green, as some support came with private report that emerging as a significant source of investments into capital markets, Employees Provident Fund Organisation (EPFO) is likely to pump in Rs 25,000-30,000 crore in equities in 2017-18 with Rs 5,700 crore already invested this year so far. The report added that National Pension Scheme (NPS) is also among the sources for driving the domestic flow surge, which has been positive for the past 17 months. Traders also get some comfort with a joint report by Ficci and Deloitte which stated that Indian retail industry, growing at 10 percent, may almost double to Rs 85 trillion (lakh crore) by 2021 steered by consumer data and technology disruptions. Finally, the BSE Sensex rose 24.78 points or 0.08% to 31,687.52, while the CNX Nifty was up by 4.90 points or 0.05% to 9,934.80.