Markets to extend gains with a solid start

The Indian markets rallied in the last session recovering some ground from the last few sessions slump, on firm global cues and expectations for further rationalization of Goods and Services Tax (GST) rates. Today, the start is likely to be in green and the markets will be extending their gains on positive global cues and as Moody`s Investor Services, pinning faith in the continued progress on economic front backed by institutional reforms has lifted the Government of India’s local and foreign currency debt ratings to Baa2 from Baa3. The rating agency said that the reforms will improve the business climate in the country and raise productivity. Traders will also be getting some support from statement of former RBI Governor C Rangarajan who said the inflation, which rose to 3.58 percent in October, may ease by December and end up below 4 percent by the end of the current fiscal. However, there will be some cautiousness too in India Inc. as the Reserve Bank of India is likely to come up with a fresh list of around 50 loan accounts that are either under stress or close to being classified as non-performing assets. The regulator may set a March 31 deadline for banks to find a resolution on these or commence bankruptcy proceedings against the borrowers. There will be buzz in the realty stocks, as the government has decided to increase the carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG) under Pradhan Mantri Awas Yojana (PMAY). The move also means that the private developers will have incentives to increase scale.

The US markets got a strong bounce back and with the upward move on the day, the Nasdaq reached a new record closing high. The gains reflected a positive reaction to better than expected quarterly results from Wal-Mart and Cisco Systems. The Asian markets have made mostly a positive start, building up on their last session rally, as risk appetite returned amid rising odds of U.S. corporate tax cuts and encouraging earnings. 

Back home, Thursday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls tightened their grip on Dalal Street, with Nifty and Sensex recapturing their crucial 10,200 and 33,100 levels, respectively. The markets’ mood remained up-beat throughout the day and benchmarks fervently gained from strength to strength to end near intraday high levels, as investors continued hunt for fundamentally strong stocks. Key gauges made a positive opening with Finance Minister Arun Jaitley’s statement that with greater digitisation and formalisation of financial activities and businesses, India is set to become an “extremely attractive” country to do business. He, however, acknowledged short-term challenges for the country in implementing strategic initiatives such as demonetisation and the GST. Adding to the optimism, Arun Jaitley said that India's economic slowdown has bottomed out and now it should start moving upwards after recovering from the temporary blip seen during the recent structural changes. The finance minister also assured investors of a strong banking sector in India. Some support also came with Chief economic adviser (CEA) Arvind Subramanian’s statement that recent move by the Goods and Services Tax (GST) Council to cut tax on 178 items, though, will have marginal impact on the revenue but that will be compensated by compliance benefits. He also feels that fall in prices will also help keep inflation under control. Investors took note of a private survey which showed that Prime Minister Narendra Modi remains by far the most popular figure in Indian politics, releasing the main findings of its latest survey conducted among 2,464 respondents in India. The report enlightened that the public’s positive assessment of Modi is buoyed by growing contentment with the Indian economy: more than eight-in-ten say economic conditions are good. Finally, the BSE Sensex soared 346.38 points or 1.06% to 33,106.82, while the CNX Nifty was up by 96.70 points or 0.96% to 10,214.75.