The Indian markets paring all their early gains made a flat closing in the last session, as investors adopted a cautious stance before going for a long weekend. Today, the markets are likely to get a positive start on sanguine global cues, though all eyes will be on RBI’s Monetary Policy Committee (MPC) meeting starting today. The government expects a helping hand from the RBI in the form of interest rate cut in the policy review to boost growth, though the general expectation is that central bank will vote to keep the repo rate unchanged at 6 per cent, with inflation firming up and rupee coming under pressure. Traders will be getting some support with Finance Minister FM Arun Jaitley’s indication that the government would consider reducing the goods and services tax slabs and easing compliance burden for small taxpayers once revenues from GST better those from the previous tax regime. Meanwhile, Industry body Assocham has urged the government to relax fiscal deficit targets and boost public expenditure as a means to accelerate India’s economic growth, which slipped to 5.7 percent in the June quarter. Former RBI Governor C Rangarajan too has said that the government needs to “pick up very fast” to be able to maintain a healthy annual growth. There will be some concern in gems and jewellary segment stocks on report that gems and jewellery exports contracted 8.12 per cent to $13.5 billion during April-August this year. There will be buzz from the primary market too as the SBI Life Insurance will make its debut on today. The Rs 8,400 crore IPO was subscribed 3.58 times.
The US markets extended their gains in last session, continuing their upmove to the new week, reacting to a report from the Institute for Supply Management showing an unexpected acceleration in the rate of growth in manufacturing activity in the month of September. The Asian markets too have made mostly a positive start, as the US manufacturing report has bolstered optimism on economic growth and the Japanese market is heading for its highest close in more than two years on weaker yen.
Back home, erasing most of their early gains, Indian equity benchmarks ended flat on Friday, as traders opted to book profit at higher levels in last leg of trade ahead of long weekend. Traders also remained on sidelines ahead of some economic data slated to be released in next week. Though, markets started off on optimistic note as sentiments remained up-beat 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. Domestic bourses extended their gains to reclaim their crucial 31,500 (Sensex) and 9,850 (Nifty) levels, as traders took some encouragement with report that the government will stick to its borrowing and fiscal deficit targets for this fiscal, indicating that it has no plans to relax spending goals to prop up growth as of now. The finance ministry on Thursday released borrowing calendar for the second half of FY18, indicating a gross borrowing of Rs 2.08 lakh crore, which is in line with the target laid out in the Budget. Reports that the Goods and Services Tax (GST) collections in the first two months have met the target and going forward the revenue will see further surge, too aided sentiments. However, benchmarks took U-turn from high point of the day as market participants booked almost all of their early gains to end flat. Sentiments turned pessimistic on report that Securities and Exchange Board of India (SEBI) continued to hit participatory notes (P-notes) investments in month of August too. The share of foreign portfolio investments (FPI) in domestic capital markets through P-notes dropped to seven and a half year low of Rs 1.25 lakh crore at August- end from Rs 1.35 lakh crore at the end of July. Some cautiousness also crept with credit rating agency Icra’s report that Reserve Bank of India 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). Finally, the BSE Sensex rose 1.24 points to 31,283.72, while the CNX Nifty was up by 19.65 points or 0.20% to 9,788.60.
