Markets to make a cautious start amid sluggish global cues

The Indian markets suffered a sharp sell-off in the last session amid concerns that rising oil prices may lift inflation and hit economic growth. Today, the start is likely to remain cautious on sluggish global cues. Traders may however get some support with report that net direct tax collections rose by 15.2 per cent to Rs. 4.39 lakh crore between April and October this fiscal. This amounts to 44.8 per cent of the total Budget estimate of direct taxes of Rs. 9.8 lakh crore for 2017-18. Also, Arvind Panagariya, observing that the recent increase in India's ease of doing business ranking by the World Bank was long overdue, has said the country as a place for business is a lot more attractive than its ranking suggests. In a other boost to the markets, private equity (PE) and venture capital (VC) investments in India touched a new high of $21.8 billion in 2017 till date (January-October), surpassing the previous record of $19.6 billion in 2015. Meanwhile, the Insolvency and Bankruptcy Board of India (IBBI) - the insolvency regulator - has tightened the due diligence framework on resolution applicants, including promoters. Further, the IBBI has also imposed greater responsibility on the resolution professional and Committee of Creditors in discharging their duties. There will be lots of important earnings announcements to keep the markets buzzing.

The US markets made a mixed closing in the last session after a lackluster day of trade. The major averages pulled back into negative territory after reaching record intraday highs in early trading, as traders cashed in on some of the recent strength in the markets. The Asian markets have made a similar start to the overnight closing of the US markets and some of the indices are in red amid concern about the progress of U.S. tax reforms, after a report that Senate Republican leaders are considering a delay in the implementation of a corporate-tax cut.

Back home, Tuesday turned out to be a dismal day of trade for Indian equity benchmarks, where key gauges went home with a cut of around a percent, breaching their crucial 33,400 (Sensex) and 10,400 (Nifty) levels. After making an optimistic start, markets failed to hold momentum and entered into red terrain with traders shifting focus on corporate earnings and developments related to PSUs. Sentiments remained dampened with oil prices hitting their highest since July 2015 on Monday as Saudi Arabia’s crown prince cemented his power over the weekend through an anti-corruption crackdown. Traders also remained concerned with a foreign brokerage which reported that a year after the Indian government scrapped high denomination currency notes, a wide range of indicators suggest the economy is still coming to terms with the move. The report highlighted that while the initial scenes of long queues of people exchanging notes disappeared within a month or so, the shock measure left a rather lasting impact on informal economic activities, bank deposits and digital transactions. It added that in an economy where 90 percent of employment and over 50 percent of Gross Domestic Product (GDP) is derived from informal activities, this is bound to be a highly disruptive process. Markets extended its southward journey in second half of the trade to end near intraday lows. Traders failed to get any sense of relief with Finance Minister Arun Jaitley’s statement that excessive cash in the economy has 'its own cost' and India is gradually moving towards digital transactions. Investors paid no heed to the BMI Research’s latest report that the ongoing economic reforms and improvements to the business environment will continue to support India's economic growth over the coming years, and they expect the country to be one of the best performing emerging market economies, with real GDP growth set to average 6.5 percent over the next five fiscal years. Finally, the BSE Sensex declined 360.43 points or 1.07% to 33,370.76, while the CNX Nifty was down by 101.65 points or 0.97% to 10,350.15.