Markets to make a cautious but green start of the new week

The Indian markets surged in last session showing a consistent trade since beginning, as investors remained hopeful of some positive outcome from the GST Council meeting. Today, the start is likely to be in green though there will be some cautiousness too on geopolitical concern after report emerged that North Korea to mark a major anniversary this week may do another missile test. Also, as though the GST breather given to small and medium enterprises (SMEs) and exporters will address their liquidity issues, large corporates are disappointed as the GST Council didn't address many key issues such as anti-profiteering laws, transition credit issues and denial of certain input credit. Meanwhile, Revenue Secretary Hasmukh Adhia has said that the government will clear pending GST refunds of exporters by November-end and over the next six months no tax will be levied on exports as the Council has decided to revert to the pre-GST era. Finance Minister Arun Jaitley has said that government’s initiatives like Swachh Bharat, Goods and Services Tax (GST) and demonetisation are having desired impact, the latter two resulting in increasing tax compliance and squeezing quantum of cash in the economy. There will be buzz in the oil & gas sector stocks, as the Prime Minister Narendra Modi will hold a high-profile meeting with CEOs of foreign and Indian companies, as the government seeks big-ticket investment in its vast, rapidly growing energy market.

The US markets made mostly a lower closing on a mixed jobs data in the last session, though it showed a spike in hourly wages that bolstered the odds for tighter monetary policy, pushing the chances of a December hike to nearly 80 percent. The Asian markets have mostly made a positive start and the Chinese market were up returning from long holidays, though other indices in the region like Japan, South Korea and Taiwan are closed for holidays.

Back home, bulls made comeback on Dalal Street after a day’s break, with key gauges garnering gains of around a percent on Friday. Sentiments remained up-beat since start, as traders took some encouragement 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. Markets continued with jubilation throughout the day after World Bank President Jim Yong Kim said that the Goods and Services Tax (GST) is going to have a hugely positive impact on the Indian economy. He added that the recent slowdown in India’s economic growth is an aberration mainly due to the temporary disruptions in preparation for the GST, pointing out that it will get corrected in the coming months. Some support also came with Minister of Railways and Coal Piyush Goyal’s statement that India is undergoing a change in the economic narrative and rebranding itself with technology driving growth.  Adding to the optimism, retirement fund body EPFO is mulling to give its subscribers an option to set aside a higher proportion of their provident fund money for equity asset class. EPFO has been raising the amount it invests in equities since 2015, when it started with 5% of the corpus. Its investment in FY16 was Rs 6,577 crore, rising to Rs 14,982 crore or 10% of its incremental corpus in the following year. Meanwhile, investors were eyeing the GST Council meet where it is expected to provide relief to businesses by tweaking rates and procedures. The package of measures expected to be taken up by the council may include an increase in the threshold limit for the composition scheme to Rs 1-1.5 crore from Rs 75 lakh to aid micro, small and medium enterprises, a more liberal exemption limit, and a lower compliance burden with quarterly rather than monthly filing apart from steps to boost exports. Finally, the BSE Sensex surged 222.19 points or 0.70% to 31,814.22, while the CNX Nifty was up by 91.00 points or 0.92% to 9,979.70.