Markets likely to start the new week on a soft-to-cautious note

The Indian markets continued their bull run in the lasts session; however today the start of the new week is likely to be a bit cautious on mixed regional cues. All eyes will be on GST Council meeting, slated later during the week which is expected to consider lowering of the 28 percent GST rate on certain common use items. Traders will also be getting some support with reports that government could consider a proposal to stagger deadlines for filing of monthly returns under the Goods and Services Tax for small and large firms. The move would ensure that the rush towards the last few days gets partly dissipated and leads to lower burden on the IT systems as well that often leads to large delays in uploading of returns and invoices. There will be some action in food processing and related stocks, as the Minister for Railways and Coal Piyush Goyal has said that the categorisation of the food processing sector for bank credit should be reviewed as it could in turn help double farmers’ income. There will be buzz from the primary market too, as the shares of Reliance Nippon Asset Management Company (AMC) will mark its debut on the National Stock Exchange (NSE). The IPO got tremendous response and was oversubscribed by 81.54 times.

The US markets extended their gains in the last session with major averages ending at record highs after the tech giant Apple came with a strong set of numbers. The Asian markets have made a somber start after China’s central bank chief warned again about excessive leverage, however, the Japanese market was marginally in green as the yen tumbled to the weakest since March after Bank of Japan Governor Haruhiko Kuroda said it’s crucial for inflation to exceed the 2 percent target.

Back home, Friday turned out to be a fabulous day of trade for Indian equity benchmarks where Nifty and Sensex once again scaled fresh record highs and ended above 10,450 and 33,600 levels, respectively. Despite some initial volatility, markets gained momentum and traded jubilantly throughout the session, as sentiments remained up-beat with the government’s statement that it has approved foreign direct investment (FDI) proposals worth Rs 24.56 crore, including one from Sterling Commerce Solutions India. Markets extended their northward journey mainly after the Nikkei India Services Purchasing Managers’ Index rose to 51.7 in October from September’s 50.7 due to greater inflows of new business. The report enlightened that service providers retained an optimistic outlook regarding business activity over the coming 12 months, while the labor market was further reinforced as firms raised their payroll numbers over the month.  Traders also took some comfort with Prime Minister Narendra Modi’s statement that starting business in India is easier than ever before as procedures have been simplified, archaic laws repealed and compliance requirements reduced. Meanwhile, responsible or sustainable investment in India is at a niche stage as assets deployed under this strategy amount to nearly $31 billion, while globally it stood at a whopping $22.89 trillion. Adding to the optimism, former RBI governor Raghuram Rajan termed the government’s announcement to infuse Rs 2.11 lakh crore in PSU banks as good news saying it is important for banks to have capital for lending going forward. He added that public sector banking system is a big part of Indian system and it is about 70%. Investors took note of the Reserve Bank of India (RBI) statement that corporate borrowers who fail to get a Legal Entity Identifier (LEI) number from banks won’t be given credit. The schedule for getting the LEI number is spread out till December 2019 and depends on exposure. Finally, the BSE Sensex gained 112.34 points or 0.33% to 33,685.56, while the CNX Nifty was up by 28.70 points or 0.28% to 10,452.50.