Markets to make a mildly positive-to-flat start

The Indian markets despite a choppy trade extended their gains in the last session and euphoria of Moody's decision to upgrade India's sovereign rating after a gap of 14 years, kept supporting the local markets. Today, the start is likely to remain in green however, there will be some cautiousness too with the government likely to tighten the Insolvency and Bankruptcy Code (IBC) through an ordinance to ensure that wilful defaulters and promoters of companies in loan default over an extended period of time won’t be able to get their hands back on assets during the resolution process. Also, there will be buzz with the Cabinet giving its nod for constitution of the 15th Finance Commission that will decide the tax-sharing formula between the Centre and states for five years beginning FY21. Its recommendations will have to be in place before April 1, 2020. Meanwhile, the government has constituted a task force for redrafting the 50-year old income tax law in sync with the economic needs of the country. Markets may get some support with rating agency Moody's in its latest report expecting an improvement in the credit profiles of India Inc next year, driven by better sales as it expects GST-related disruptions to wane, leading to an all-round recovery in economic activities. The aviation stocks will be in action, as to provide a major boost to air connectivity in the Northeast, 92 new routes will be opened in the region in the second round of the government’s ‘Udaan’ scheme.

The US markets made a mixed closing in the last session; the trade remained light ahead of the holiday. The trade showed lack of direction following the release of the minutes of the Federal Reserve's latest monetary policy meeting. The Asian markets have made mostly a positive start as the latest Federal Reserve meeting minutes highlighted a dovish tilt that showed divisions over the future path for U.S. monetary policy. Hong Kong’s benchmark gauge for stocks moved past the 30,000 level for the first time in a decade.

Back home, extending their northward journey for fifth straight session, Indian equity benchmarks ended the Wednesday’s trade with a gain of around quarter a percent. Despite some hiccups in first half of the session, markets traded with traction for most part of the day with traders taking some support with report that GST tax returns filed increased. Filings of the summary returns GSTR-3B - with which the tax needs to be paid or nil liability claimed - have increased over the months since July. Till the August 20 deadline for filing GSTR-3B for the month of July without fine, 34 lakh returns were filed; the returns filed before the respective deadline for September was higher at 39.4 lakh and the number for October grew further to 43.7 lakh. Some support also came with report that earnings of companies in the September quarter surprised investors and analysts, who almost doubled their upgrade ratings on the stocks they cover after the results. The sentiments also remained positive with ICRA’s report highlighting that the economic expansion in terms of gross value added (GVA) is expected to improve to 6.3% in the three months to September from 5.6% in the previous quarter, on the back of a rise in industrial growth. Headline GVA growth, however, is likely to trail the 6.8% recorded in the second quarter of FY17. Investors also took some comfort with the report that the government has set up a 14-member panel to identify and suggest ways to address issues faced in implementation of the law. Meanwhile, the Cabinet approved a policy framework for central public sector enterprises (CPSEs) to negotiate the next round of wage revision with their workers. However, gains remained capped, as investors took note of a report that S&P said India’s activity indicator looks lackluster indicating they might not barge on the BBB- rating on India any time soon. Finally, the BSE Sensex gained 83.20 points or 0.25% to 33,561.55, while the CNX Nifty was up by 15.40 points or 0.15% to 10,342.30.