Markets to make a cautious start of the penultimate session of F&O expiry

The Indian markets lost their way completely in the final hours and ended with cut of over a quarter percent in the last session, as traders went for profit taking following recent sharp gains. Today, the start of the penultimate session of F&O series expiry is likely to remain cautious on mixed regional cues and there will be some concern with a private report, stating that both goods and services tax (GST) collections as well as its compliance in the first four months since the rollout of the new tax regime remain well be below the target, and the situation is unlikely to improve in the near- term. Though, traders will be taking some encouragement with Prime Minister Narendra Modi’s statement who called upon entrepreneurs from across the globe to make India their base for the world. He said, India has emerged as one of the fastest-growing economies and a happening place with immense opportunities in a number of areas. I assure you of government support to ensure your success. Meanwhile, Minister for Petroleum and Natural Gas, Dharmendra Pradhan has made a strong case for inclusion of natural gas in the Goods and Services Tax, saying that if polluting coal can be included, then the environment-friendly fuel certainly deserves a place in the new regime. There will be buzz in the insurance pack, as the global rating agency Moody's in its latest report has said that non-life insurance sector is likely to maintain its double digit growth over the next three to four years, aided by a higher economic expansion and increased household spending.

The US markets ended higher in the last session and the major averages climbed to new record closing highs, due to news the Republican tax reform bill took another key step forward, as the legislation was approved by the Senate Budget Committee. The Asian markets have made a mixed start and some of the indices are trading in red after a North Korean missile test.  The Japanese market was up as the yen declined with Federal Reserve chair nominee Jerome Powell signal of a lighter touch on financial regulations.

Back home, Indian equity benchmarks ended the Tuesday’s trade with a cut of around one third of a percent, as traders opted to book profit after eight day winning streak ahead of November derivatives expiry and release of September-quarter GDP data later in the week. Markets started the session on pessimistic note on report that tax collection under the Goods and Services Tax (GST) was lower at Rs 83,346 crore in October, against a mop-up of over Rs 90,000 crore in September. The Finance Ministry said that total collection stood at Rs 83,346 crore till November 27 for the month of October and 50.1 lakh returns were filed for the month. Sentiments also remained dampened with rating agency CRISIL enlightening that India’s competitiveness in the labour intensive export sectors has been on a declining path in the last decade and needs significant structural reforms that need to be addressed. The agency analyzed the competitiveness of the labour intensive export sectors namely, gems & jewellery, leather & leather products and readymade garments which showed that these have become less competitive over the last decade. However, markets witnessed recovery and gained green terrain with traders taking some solace with report that the government sticking to its promise to lower the tax burden on India Inc is exploring the possibility of reducing the corporate tax rates for larger firms as well. The exact quantum of the cut in corporate tax rate is expected to be finalised closer to the presentation of the Union Budget 2018-19, but revenue implications also have to be factored in. Some comfort also came with report that Asian Development Bank is expecting the Indian economy to pick up in the coming quarters and grow by 7 per cent this fiscal. Meanwhile, the Industry body, Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest Economic Outlook Survey forecasted India's GDP growth to improve to 6.2 percent in Q2FY18 and rise further to 6.7 percent in Q3FY18. Though, the recovery proved short lived with selloff in last leg of trade once again pulled key gauges back into red trajectory to end near intraday lows. Finally, the BSE Sensex declined 105.85 points or 0.31% to 33,618.59, while the CNX Nifty was down by 29.30 points or 0.28% to 10,370.25.