Markets to make a cautious start amid mixed global cues

The Indian markets despite paring some gains, managed a decent close in the last session after RBI maintained a status quo in its policy review. Although it was on expected lines but the traders turned cautious with the central bank slashing its current fiscal growth forecast to 6.7 percent on gross value-added basis, saying GST rollout glitches have hurt manufacturing in the first half but also said that an uptick is expected in the second half. The RBI had estimated the economy to clip at 7.3 percent on a GVA basis earlier. Today, the start is likely to be a bit cautious to soft, reacting to RBI’s policy stance, the finance ministry though said it has taken note of the RBI decision to maintain status quo on interest rate and the downward revision of growth forecast for the current fiscal and welcomed the initiative with regard to Peer to Peer (P2P) NBFC financing regulation, saying it would benefit smaller firm. There will be some buzz in the market with RBI stating that it will review the foreign portfolio investment norms and come out with a new set of regulations, to be effective next April. Traders will be getting some support with NITI Aayog CEO Amitabh Kant’s statement that while there has been a 'little bit of dip' in the Indian economy, it is now bouncing back. Prime Minister Narendra Modi too has asserted that the economy is much better than critics make it out to be and that his government is “totally committed” to reverse the slowdown in GDP growth in recent quarters. Banking stocks will continue to remain in action with RBI’s 50 basis points cut in SLR, which will further ease liquidity in the banking system. There will be some buzz from the primary market too, as the Prataap Snacks will list its shares on bourses today. The Rs 482 crore IPO was oversubscribed 47.39 times.

The US markets moved further high in the last session and the major averages climbed to new record closing highs. Though, the buying interest remained somewhat subdued, with traders reluctant to make more significant moves ahead of the release of the closely watched monthly jobs report on Friday. The Asian markets have made a mixed start and some of the indices in the region are mildly in red, amid holiday-induced closures in Hong Kong, China, and South Korea.

Back home, extending northward journey for fourth straight session, Indian equity benchmarks ended the session with a gain of over half a percent on Wednesday, reclaiming their crucial 9,900 (Nifty) and 31,600 (Sensex) levels, as the Reserve Bank of India’s (RBI's) decision to keep repo rate unchanged at 6.0 percent was in line with investors’ expectation in view of upward trend in inflation. The central bank, however, has slashed the statutory liquidity ratio or the percentage of deposits that banks have to park in government securities, by 0.50 percent to 19.50 percent. The move is expected to raise buoyancy in the loans market as banks will have slightly higher funds for lending. Soon after a cautious start markets gained momentum and traded with traction through the session, as traders took encouragement with the growth of eight core infrastructure industries which surged to five-month high by 4.9 percent in August 2017, as compared to 2.4 percent in July 2017, on the back of a double-digit jump in coal production and subsequent rise in electricity generation. According to the data released by the ministry of Commerce and Industry showed the combined Index of eight core industries stood at 123.6 in August, 2017, which was 4.9 percent higher compared to the index of August, 2016. Sentiments also remained buoyed with foreign brokerage report highlighting that a majority 77 percent of the mid market enterprises (MMEs) in the country are confident about the domestic economy and expect higher revenue growth compared to their global peers. Separately, the government sees the decline in growth as a hiccup and expects the economy to pick up pace in the fiscal second quarter as teething troubles with GST get resolved and the effect of demonetization wanes. The latest high-frequency indicators such as commercial vehicles sales, core sector growth and manufacturing PMI bolster this contention. Finally, the BSE Sensex surged 174.33 points or 0.55% to 31,671.71, while the CNX Nifty was up by 55.40 points or 0.56% to 9,914.90.