Markets to make a weak start on soft global cues

The Indian markets once again declined in late hours to end modestly in red in the last session, as the traders adopted a cautious stance ahead of September-quarter GDP data. Today, the start of F&O series expiry session is likely to be in red on weak global cues and traders will be eyeing the dataprint for the September quarter GDP that will be announced later in the day, though it is expected that economic growth pace is likely to pick up in the three months ending in September, halting a five-quarter slide as businesses started to overcome teething troubles after the bumpy launch of a national sales tax. Traders will also be getting some support with Minister of State for Finance, Shiv Pratap Shukla’s statement that by March 2018, GST will become so simple that people will have no issues. The steel stocks will be buzzing with a report from Moody’s Investors Services which has said that profitability of Indian steel companies is likely to improve next year despite an increase in raw material prices. The rating agency said that among major steel-producing Asian countries, operating conditions will be most supportive in India because of robust domestic demand and protectionist measures, and despite an increase in raw material prices and new capacity. Export oriented stocks too will be in focus as the Finance Ministry has asked exporters to file GSTR 3B and table 6A of GSTR 1 on the GSTN portal and Shipping Bill(s) on the Customs EDI System, which are pre-requisites for sanction of payment.

The US markets made a mixed closing in the last session and while the Dow climbed to a new record closing high, the tech-heavy Nasdaq declined sharply, as traders cashed in on recent strength among tech stocks. The Asian markets have made a soft start and some of the indices are down by over half a percent led by the Hong Kong market which is down by around a percent on slide in tech stocks, following the overnight slump in US tech stocks.

Back home, Indian equity benchmarks ended the choppy day of trade with marginal losses, as traders remained on sidelines ahead of November derivatives expiry and release of September-quarter GDP data tomorrow.  Sentiments also remained dampened 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, markets kept their head above water for most part of the day’s trade with traders 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 that India has emerged as one of the fastest-growing economies and a happening place with immense opportunities in a number of areas. Some support also came with Meanwhile, Minister for Petroleum and Natural Gas, Dharmendra Pradhan made a strong case for inclusion of natural gas in the GST, saying that if polluting coal can be included, then the environment-friendly fuel certainly deserves a place in the new regime. However, profit booking in dying hour of trade dragged markets below their neutral lines to end with modest losses. Sentiments turned pessimistic with a foreign brokerage firm lowering India’s GDP growth forecast for current fiscal to 6.6 percent from the previous 6.8 percent, citing that businesses were still adjusting to the new GST regime and there was limited room for fiscal support. Inflation is expected to edge up on higher commodity prices and stronger demand momentum, whilst the current account and fiscal deficits run the risk of re-widening. Besides, reports that the Reserve Bank of India is likely to leave interest rates unchanged at its December policy meeting and through the end of next year, too weighed sentiments. Finally, the BSE Sensex declined 15.83 points or 0.05% to 33,602.76, while the CNX Nifty was down by 8.95 points or 0.09% to 10,361.30.