Markets to make a flat-to-mildly positive start

The Indian markets after a choppy trade made a modestly positive close in last session. Today, the start is likely to be flat to mildly in green. There will be some cautiousness with RBI Governor Urjit Patel’s statement that the economy was recovering, after growth slowed to a three-year low of 5.7 percent in the April-June quarter. But he said that fostering monetary conditions conducive to economic growth were a constant consideration for Indian policymakers, but would not take priority over achieving the central bank`s inflation target. There will be some buzz in the energy sector stocks, as the Prime Minister Narendra Modi has said that the status of the energy sector in India was highly uneven and the scope for reform in many areas still exists. In an interaction here with oil and gas CEOs and experts from across the world, he welcomed the suggestion made for a comprehensive energy policy. Meanwhile, over 4,250 manufacturing units located in the north-eastern and Himalayan States are to get a Diwali gift from the Centre, as the government will provide a budgetary support of Rs 27,413 crore for 4,284 units over July 1, 2017 till March 31, 2027 to recompense them for losing their excise duty-exempt status post GST implementation from July 1.

The US markets extending their sluggishness made a modestly lower closing in the last session. The trade remained lackluster as many traders were away from their desks due to the Columbus Day holiday. The Asian markets have made mostly a positive start, as investors assessed political developments in Washington before the start of earnings season and the release of minutes from the most recent Federal Reserve meeting.

Back home, Indian equity benchmarks ended the volatile day of trade with marginal gains on Monday, as traders remained on sidelines ahead of July-September quarter earnings, slated to be released this week. Soon after a cautious start, markets gained momentum and regained their crucial 10,000 (Nifty) and 31,900 (Sensex) levels, as traders took encouragement with the GST Council on Friday announcing a slew of decisions to reduce compliance burden, including the eventual setting up of an e-wallet for input tax credits for exporters, and the option for small businesses to file returns and pay taxes only once a quarter. The GST Council also reduced the tax rates on 27 items. Some support also came with Finance Minister Arun Jaitley stating that government’s initiatives like Swachh Bharat, Goods and Services Tax (GST) and demonetisation are having desired impact, with the latter two resulting in increasing tax compliance and squeezing quantum of cash in the economy. Traders also took note of Revenue Secretary Hasmukh Adhia’s statement 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. However, traders booked profit at higher levels and markets ended the session marginally in green terrain. Gains remained capped 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. Finally, the BSE Sensex gained 32.67 points or 0.10% to 31,846.89, while the CNX Nifty was up by 9.05 points or 0.09% to 9,988.75.