Markets to make a strong start on bullish global cues

The Indian markets made decent gains in the last session on ease in some geo-political worries. Today, the start is likely to be in green tailing the strong global cues. There will be some support with report that direct tax collections in the first five months of the current fiscal grew 17.5% to Rs 2.24 lakh crore, mainly on account of income tax mop-up from individuals. This is 22.9% of the total budget estimates of direct taxes, which comprise personal income and corporate tax, for the current financial year.  Traders will be eyeing the macro data of industrial production for July scheduled to be announced post market hours. The growth rate of industrial output, measured by the Index of Industrial Production (IIP), slumped to 1.7 per cent in May from 8 per cent expansion in the same month last year. Also, the inflation data based on consumer price index (CPI) for August will be released, which is expected to have picked up to a five-month high. Meanwhile, a RBI paper has said that farm loan waiver amounting to Rs 88,000 crore likely to be released in 2017-18 by seven states, including Uttar Pradesh and Maharashtra, may push inflation on permanent basis by 0.2 per cent. The PSU oil marketing companies will keep buzzing, as the Finance Ministry has ruled out cut in excise duty on petrol, diesel.

The US markets rallied in last session as Hurricane Irma hit Florida with less force than expected and North Korea failed to conduct another nuclear missile test over the weekend, helping to lure investors into buying assets. The Asian markets have extended their gains, with less damage than originally feared from Hurricane Irma supporting the case for a gradually improving U.S. economy. Japanese market hit its best intraday level in a month as the yen continued to pull back.

Back home, bulls tightened their grip on Dalal Street on Monday with Nifty recapturing their crucial 10,000 level, while Sensex ended just shy of 31,900 mark, as global investors relieved from the fact that North Korea did not indulge in any fresh provocative move that would flare up geopolitical tensions. Sentiments remained jubilant since morning with frontline gauges started the session with gap-up opening as traders reacted positively 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. Markets extended their rally on foreign brokerage firm’s report that India’s trade deficit is expected to improve in August to about $10.3 billion from $11.5 billion in July, largely on moderation in export as well as import growth. According to the global financial services major, the moderation, on a year-on-year basis, is likely owing to higher oil prices and unfavourable base effects. It estimates a moderation of export growth to 3.4% year-on-year in August from 3.9% in July and imports of 11.3% in August from 15.4% in July. Meanwhile, welcoming the decision of the GST Council of reducing the rate on supply of various scrips from 12% to 5%, the Federation of Indian Export Organizations (FIEO) said the move will give a boost to the exports sector. Market participants shrugged off report that 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. Finally, the BSE Sensex surged 194.64 points or 0.61% to 31,882.16, while the CNX Nifty was up by 71.25 points or 0.72% to 10,006.05.