Markets to make a green start, later trade to depend on assembly poll outcome

The Indian markets surged in last session after exit poll results predicted a win for the Bharatiya Janata Party in the recently held Gujarat and Himachal Pradesh state assembly elections. Today, the start of the crucial day is likely to be in green on positive global cues and bourses will extend their gains as investors await the outcome of elections in Gujarat and Himachal Pradesh. With the progress of the day markets would start reacting to the election outcome once they start pouring in. There will be support to the markets with the data from the commerce department, which showed that India’s exports rose at a faster clip in November, reversing the contraction in the previous month. Exports grew 30.6 per cent in November from a year ago,while imports rose 19.6 per cent. Traders will also be getting some encouragement with statement of an UN expert that India can achieve an eight percent growth rate for the next two decades by promoting investment and improving the living conditions of its people. There will be some cautiousness too, as the industry body, Assocham has said that India Inc will have to factor in political realities weighing on economic decisions of the government, including in the forthcoming budget, as several major states are going to polls in 2018. Meanwhile, in a bid to plug gaps, the all- powerful GST Council has decided to implement the e-way bill mechanism throughout the country by June 1 after reviewing the readiness of the IT network. Under the e-way bill system, goods worth more than Rs 50,000 have to be pre-registered online before they can be moved from one state to another.

The US markets moved higher in the last session, lifting all three of the major averages to new record closing highs, as traders expressed optimism about Republican lawmakers passing tax reform legislation. The Asian markets have made mostly a positive start after a Republican agreement on the shape of US tax cuts aimed at boosting growth in the world’s largest economy.

Back home, jubilation continued on Dalal Street for second straight session and Indian equity benchmarks ended the session with a gain of over half a percent, recapturing their crucial 10,300 (Nifty) and 33,400 (Sensex) levels. Markets after a gap-up opening traded with traction with exit polls indicating both Himachal Pradesh and Gujarat going in favour of ruling BJP. Exit polls conducted by various polling agencies have predicted that BJP would retain Gujarat, the major battle ground despite a reduced margin of seats in the 182-member assembly. Some support also came with global rating agency Moody’s statement that it has a stable outlook for non-financial corporate in the country, except for telcos, on which it has a negative outlook for 2018. It said that stable outlook is underpinned by the expectation that GDP growth of around 7.6% will result in higher sales volumes. Traders also took some encouragement with Finance minister Arun Jaitley identifying infrastructure creation, resolution of non-performing assets and recapitalization of banks as the priority areas to push the country further on growth path. Sentiments also remained up-beat as the International Monetary Fund (IMF), which is slated to come out with an update of its projections of India’s growth rate along with the rest of the world in January, sees benefits in the medium-term from the demonetisation exercise which India carried out about a year ago. Besides, traders took support with the private report stating that India’s economic growth has bottomed out and the GDP growth will recover further to 7% over the next few quarters but it is likely to take few years to return to 7.5% above levels. Though, markets ended off day highs, as traders opted for wait and watch approach, eyeing the winter session of Parliament. During a total of 14 sittings over a duration of 22 days, both the Houses, Lok Sabha and Rajya Sabha, will take up 25 Bills, including GST compensation to states, for consideration and passing. Finally, the BSE Sensex surged 216.27 points or 0.65% to 33,462.97, while the CNX Nifty was up by 81.15 points or 0.79% to 10,333.25.