Markets to make a green start on positive global cues

The Indian markets turned to consolidation mood in last session, traders remained on sideline ahead of more earnings due this week. Today, the start is likely to be good on positive global cues and traders will be drawing encouragement with reports that the government is considering a major overhaul of the goods and services tax (GST) as suggested by a ministerial panel. It has been reported that the government may review the requirement of filing at least three returns every month under the GST regime with a view to easing compliance burden of taxpayers. Meanwhile, ahead of the first anniversary of demonetisation, Finance Minister Arun Jaitley has said that excessive cash in the economy has "its own cost" and India is gradually moving towards digital transactions. There will be some buzz in the engineering sector stocks, on report that Indian engineering exports are benefiting from an impressive turnaround in demand in most of the developed economies, including the US and Europe. The oil companies too may see some action as the international crude oil prices edged lower on Tuesday after posting the biggest gains in six weeks a day earlier. There will be lots of important earnings announcement to keep the markets buzzing for the day.

The US markets moved modestly higher in the last session making another record high for the major averages, amid optimism about the economy and the likelihood of passage of the republican tax reform plan. The Asian markets have made mostly a positive start and some of the indices have surged around a percent as President Donald Trump tried to tackle trade on his Asia tour. The Japanese Nikkei reached its highest level in more than 21 years.

Back home, Indian equity benchmarks witnessed consolidation on Monday amid volatility, as traders remained on sidelines ahead of 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. After a cautious start markets traded choppy in first half, as sentiments remained dampened on foreign brokerage report which highlighting adverse macroeconomic impact of rise in crude oil prices, said every $10 per barrel rise in the price will worsen India’s fiscal balance by 0.1 percent and current account balance by 0.4 percent of GDP. At the same time, it also estimated that every $10/bbl rise in crude oil price would hit the central government’s fiscal balance by 0.1 percent of GDP. It also added that every $10/bbl rise in crude oil price would increases CPI inflation by 0.6-0.7 percentage points. Markets gained momentum and entered into green terrain in second half of trade to hit all time record highs. Traders took some encouragement with report 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. Some support also came with Prime Minister Narendra Modi’s statement that the recently introduced GST regime will further improve India’s ranking in the ease of doing business and pointed that the recent ranking did not take into account implementation of GST. However, profit booking which emerged in dying hour of trade mainly dragged key indices near neutral lines and domestic bourses ended flat. Finally, the BSE Sensex gained 45.63 points or 0.14% to 33,731.19, while the CNX Nifty was down by 0.70 points or 0.01% to 10,451.80.