Markets to witness some recovery with a positive start

The Indian market suffered sharp selling in the second half that dragged the benchmarks from record highs to the negative terrain and major averages closed with loss of about a quarter percent. Today, the start is likely to be in green and recovery can be expected with traders getting some support from report that direct tax collections in the first six months of the current fiscal stood at Rs 3.86 lakh crore, growing by 15.8 per cent over the same period last year. Gross collections (before adjusting for refunds) have increased by 10.3 per cent to Rs 4.66 lakh crore during April to September. Also, the newly constituted Economic Advisory Council to the Prime Minister (EAC-PM) wants the government to stick to its fiscal consolidation road map and has suggested that stimulus to the industry should not be at the cost of fiscal prudence. The EAC-PM in its first meeting stressed upon accelerating economic growth and employment. Apart from the macro economic data of IIP and CPI to be released later in the day, traders will be eyeing the second quarter earnings of IT bellwether TCS. The company is expected to post increase in its profit on sequential basis and improvement in margin. There will be some buzz in oil & gas sector stocks, as the government has rationalised the tax rates on upstream oil and gas operations, while the Petrol pump dealers called off their proposed strike on October 13.

The US markets extended their gains despite a relatively lackluster day of trade in last session and the major averages climbed to new record closing highs, following the release of the minutes of the Federal Reserve's latest monetary policy meeting, where many participants expressed concern that the low inflation readings this year might reflect not only transitory factors but also the influence of developments. The Asian markets have made mostly a positive start, as the minutes showed there remains a strong degree of caution at the US Federal Reserve over the timing of future interest-rate increases.

Back home, paring all of their initial gains, Indian equity benchmarks ended the trade in red terrain on Wednesday. Selling which crept in final hour of trade mainly played spoil sport for the key gauges and pulled them below their crucial 10,000 (Nifty) and 31,900 (Sensex) levels, as traders opted to book profit at higher levels ahead of Q2 numbers of TCS and Reliance scheduled to be released on October 12 and October 13 respectively. Though, markets started the session on optimistic note, as sentiments remained upbeat with OPEC’s statement that India is experiencing some of the greatest structural changes as bold new reforms like note ban and GST have put the country firmly on a sustainable growth path. Some support also came with report that Private Equity/Venture Capital (PE/VC) investments touched a record high of $8.7 billion in the September quarter, a sharp increase over the last year, largely driven by big-ticket transactions. The surge was driven by large transactions, with nine $200-million-plus deals in the said quarter. Adding to the optimism, former RBI Governor C Rangarajan said that he expects that the economy would grow at 6.5% for the year 2017-18. He also said the job opportunities and economic growth of the country are inter-related.  However, markets took U-turn and entered into negative terrain as traders booked profit ahead of key economic data of August IIP and September CPI, which are scheduled to be released tomorrow. Some cautiousness also crept on report that US President Donald Trump discussed a ‘range of options’ with his top military advisors to respond to North Korea’s aggression and prevent it from threatening the US and its allies. North Korea has fired 22 missiles during 15 tests since February, drawing a sharp reaction from the US and its allies. Sentiments also turned downbeat on report that International Monetary Fund (IMF) pared India’s growth forecast for FY18, citing the lingering impact of demonetisation and disruption caused by the goods and services tax (GST), though it expects a revival as structural reforms bear fruit. Finally, the BSE Sensex lost 90.42 points or 0.28% to 31,833.99, while the CNX Nifty was down by 32.15 points or 0.32% to 9,984.80.