Markets to make a soft-to-cautious start on mixed global cues

The Indian markets after a lackluster day of trade ended flat in the last session ahead of the Fed decision. Today, the start is likely to remain cautious on mixed global cues, though US Fed forecasts only two rate increases in 2019 and one in 2020, but it would stick to the schedule for normalising balance sheet by trimming its bond portfolio from October. On the domestic front, there will be concern with some report that advance tax payments by top corporate for September quarter has increased only marginally. Traders will however be getting some support with Finance Minister Arun Jaitley's hint at a package of measures to boost the economy, while virtually ruling out any cut in duties on petroleum products to check the spike in fuel prices. Jaitley said the government is considering additional measures to bolster economy that has hit a three-year low of 5.7 percent in the first quarter of the current fiscal. He said an announcement with regard to the additional steps will be made after consulting Prime Minister Narendra Modi. There will be some action in auto sector stocks, as Moody’s Investors Service in its latest report has said that car sales in India are expected to grow by nine per cent this year riding on the back of GST regime as well as new product launches.

The US markets turned into consolidation mood and made a mixed closing in the last session, as traders digested the Federal Reserve's monetary policy announcement. Fed left interest rates unchanged as widely expected but signaled another rate hike is likely this year. The Asian markets have made a mixed start and some indices are up by over half a percent in early deals, though few are in red too on Fed’s hawkish tone.

Back home, Indian equity benchmarks ended the choppy day of trade on flat note with negative bias on Wednesday, as investors girded for another round of geopolitical tensions after US President Donald Trump threatened to annihilate North Korea. Frontline gauges swung between green and red throughout the day, as traders remained cautious ahead of outcome of two-day Fed policy review later in the day. Sentiments also remained dampened with SBI Research stating that economy has been on a downslide since September 2016 and the slowdown is real and not technical, calling for more public spending to arrest the slide. The report advocated upping of spends by the government as a solution to the problem at hand. Meanwhile, exporters fearing that a staggering Rs 65,000 crore could get stuck in GST refunds have asked the government to fast-track the refund process and avoid further deterioration in their liquidity situation. The 22nd meeting of the GST Council, chaired by Union Finance Minister Arun Jaitley, will be held on October 6 to deliberate on GSTN glitches and ironing out issues faced by exporters. However, traders took some solace with report that the government may soon unveil a package of measures to speed up growth, generate employment, lift exports and step up investment in infrastructure. A broad framework to boost the economy was discussed in a meeting of ministers and officials chaired by finance minister Arun Jaitley late Tuesday evening as the government grappled with a slump in growth. Traders also get some sense of relief with World Bank India chief Junaid Ahmad’s statement that effective implementation of the new tax regime will help the economy achieve 8% plus growth and described GST a ‘tectonic shift’. Junaid Ahmad, further highlighting the positive impact of GST, said that the economic corridors of India will change on the back of the new tax regime. Finally, the BSE Sensex slipped 1.86 points or 0.01% to 32,400.51, while the CNX Nifty was down by 6.40 points or 0.06% to 10,141.15.