Markets to make a mildly positive start on supportive global cues

The Indian markets snapped their losing streak in the last session supported by some late hour short covering due to F&O series expiry. Today, the start of the new series is likely to be in green on positive global cues. Traders will also be getting some support with statement of Niti Aayog member Bibek Debroy, who is also Chairman of the Prime Minister’s Economic Advisory Council that while there may be some minor problems with the economy, it was nothing to be worried about. However, there will be some cautiousness too, as a report from credit rating agency Icra has said that Reserve Bank is likely to leave policy rates unchanged in the forthcoming policy review next month as it expects a spike in retail inflation going ahead. Meanwhile, the Centre plans to borrow Rs 2.08 lakh crore from the market in the second half of 2017-18, reiterating the government's commitment to meet the fiscal deficit target of 3.2 per cent of the gross domestic product (GDP). The export oriented stocks will keep buzzing as the Industry bodies and exporters raised their concerns related to the Goods and Services Tax (GST), including timely refund of duties, with Finance Minister Arun Jaitley at a meeting. FIEO pressed for exemption from GST for merchant exporters, immediate start of the refund process with exporters facing liquidity issues and allowing export benefit scrips for payment of IGST and CGST.

The US markets ended modestly higher in last session , though the trade remained lackluster with the major averages spending much of the day on opposite sides of the unchanged line. The Asian markets are mostly in green though there is some cautiousness too, as the chances of higher U.S. interest rates by the end of the year now sit at about 65 percent. Japanese market was down as the country’s inflation rose the most in more than two years in August and advanced for an eighth month.

Back home, snapping seven days losing streak, Indian equity benchmarks ended the session with gain of over one third of a percent. However, domestic gauges truly depicted the choppiness of F&O expiry session, with frontline gauges swinging between green and red for most part of the day, as traders remained concerned with India Ratings’ report that India’s GDP growth estimate for the ongoing financial year 2017-18 is likely to come down to 6.7 per cent from 7.4 per cent earlier as “the combined effect of demonetisation and introduction of goods and services tax (GST) is proving to be more disruptive for the economy than was expected earlier”. Separately, a poll enlightened that the Reserve Bank of India will hold policy steady at its October 4 meeting, and well past next year, amid weak economic growth and signs inflation may soon overshoot its target. Buying in last leg of trade comes as the saving grace for the markets and helped them to end in green terrain, as the traders settled their positions and covered shorts going to new series. Traders took some solace with Prime Minister Narendra Modi’s statement that traders across the country are 'positive' about GST and accepting the new taxation arrangement but they need 'handholding' so that their problems can be resolved. He urged the chief secretaries to use the district administration in this regard, so that small traders are facilitated to access and adopt the new system. Adding to the optimism, Niti Aayog vice chairman Rajiv Kumar said that the economic downturn which began in the last two years of UPA II regime has bottomed out and the growth will improve in the next two quarters. Investors also took support with private report highlighting that India is expected to be a $6 trillion economy -- the third largest in the world -- in the next 10 years, majorly helped by digitization. According to global brokerage firm, India's digitisation drive would provide a boost of 50-75 basis points to GDP growth in the coming decade. Finally, the BSE Sensex surged 122.67 points or 0.39% to 31,282.48, while the CNX Nifty was up by 33.20 points or 0.34% to 9,768.95.