Markets to see some recovery with a positive start

The Indian markets gave up their hard accumulated gains in the final hours to make a close in negative territory in last session, snapping a four-day winning streak. Today, the start is likely to see some recovery tailing the positive global cues, though all eyes will be on GST Council meeting, which is expected to push through a raft of relief measures for small and medium enterprises. Traders will also be getting some support with Commerce and Industry Minister Suresh Prabhu's statement that he is working closely with the finance ministry and other departments to firm up policy initiatives along with fiscal incentives to give a fillip to industrial growth and job creation. Meanwhile, Minister of Railways and Coal Piyush Goyal has said that India is undergoing a change in the economic narrative and rebranding itself with technology driving growth. The aviation stocks will be in action on report that India`s domestic passenger traffic grew by 16 percent in August. India`s domestic demand -- revenue passenger kilometres (RPK) -- was highest amongst major aviation markets like Australia, Brazil, China, Japan, Russia and the US. There will be some buzz in the garment sector stocks, as the government has slashed duty drawback to two per cent from 7.5 per cent with effect from October 1.

The US markets continued their northbound move and the major averages extended a recent upward trend, once again reaching new record closing highs on batch of largely upbeat U.S. economic data as well as optimism about the outlook for tax reform. The Asian markets have made a green start taking cues from the US markets after comments from Federal Reserve officials helped ratchet up bets that the U.S. economy is strong enough to withstand higher interest rates.

Back home, snapping four days winning streak, Indian equity benchmarks ended the Thursday’s trade in red with marginal losses, after the Reserve Bank of India (RBI) cut its growth estimate for the current fiscal on Wednesday and warned that any economic stimulus and farm debt waivers could push up fiscal deficit by 1 percentage point, potentially stoking inflation. Markets started off on optimistic note, but soon gave up all of their gains to turn red and traded flat-to-negative. Fresh selling in the last leg of trade mainly dragged the frontline indices below their crucial 9,900 (Nifty) and 31,600 (Sensex). Investors remained cautious on foreign brokerage report that the sentiment of foreign portfolio investors towards India is likely to remain weak until corporate earnings recovery sets in.  This, coupled with high equity supply, would mean that the market performance will remain subdued until the end of the year. FPIs have pulled out over Rs 24,000 crore from Indian equities since August due to disappointment over economic growth, delay in earnings recovery, expensive valuation and geopolitical tensions. However, losses remained capped on report that Nikkei India Services Purchasing Managers’ Index rose to 50.7 in September from 47.5 in August. India’s service sector PMI marked below the 50.0 neutral level in the previous two months due to the goods and services tax (GST) introduced in July. According to the PMI survey, greater workloads supported job creation in September, with the rate of employment growth the strongest since June 2011. Traders also took some solace 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. Finally, the BSE Sensex lost 79.68 points or 0.25% to 31,592.03, while the CNX Nifty was down by 26.20 points or 0.26% to 9,888.70.