Markets to start the year 2018 on a cautious note

The Indian markets snapped the year 2017 on a jubilant note with benchmarks posting gains of over half a percent on the final trading day of the year. Today, the start of the new, week, month and year is likely to be a bit cautious lacking any supportive triggers. There will be some concern with fiscal deficit at the end of November breaching the target and touching 112 percent of the budget estimate for 2017-18, mainly due to lower GST collections and higher expenditure. Fiscal deficit was Rs 6.12 lakh crore during April-November 2017-18. Traders will also be concerned with government statement that Indian economy slowed down in 2016-17, with the gross domestic product declining drastically from 8 percent in 2015-16 to 7.1 percent the next year. Finance Minister Arun Jaitley said the slower economic growth reflected lower growth in the industry and the services sectors, due to a number of factors including structural, external, fiscal and monetary factors. However, there will be some support with report that the government has extended by 10 days the last date for filing of final sales return GSTR-1 till January 10 under the Goods and Services Tax. Businesses with turnover of up to Rs 1.5 crore will have to file GSTR-1 for July-September by January 10, 2018, as against December 31, 2017 earlier. Meanwhile, auto stocks will be in focus today, on declaring their monthly sales number for December.

The US markets made a lower closing of the final trading day of the year, but were sharply higher for the year; the decline was mainly due to investors deciding to do some profit taking following the strong upward move seen in 2017. Most of the major Asian markets are closed for trading today.

Back home, Indian equity benchmarks ended the final session of Calendar Year (CY) 2017 on strong note and frontline gauges settled at all time closing high levels, surpassing their crucial 10,500 (Nifty) and 34,000 (Sensex) levels. The markets’ mood remained up-beat throughout the day and benchmarks, after a positive start, fervently gained from strength to strength to end near all time high levels, as investors continued hunt for fundamentally strong stocks. Traders remained encouraged with Securities and Exchange Board of India’s (SEBI) decision to relax entry norms for Foreign Portfolio Investors (FPIs) willing to invest in the Indian markets. Besides, the markets regulator would allow listing of security receipts issued by an asset reconstruction company (ARC) on stock exchange platform. Some support also came with Union Minister Nitin Gadkari’s statement that the government is working on a policy to bring down the annual oil import bill by $100 billion by 2030 through extensive use of methanol in cooking gas and transportation fuel. The minster added that the government is shortly going to implement a scheme under which 15 percent methanol will be blended with petrol and which will reduce the cost of the fuel by 10 percent. Traders shrugged off study report of the industry body Assocham, which has said that a slowdown in the economy coupled with high stress level in the banking sector is expected to restrict credit growth at around 8 percent during the current fiscal despite government’s thrust on loan expansion. Traders also ignored rating agency ICRA’s statement that rising commodity prices, especially that of crude oil that has hit a three-year peak last week, will double current account deficit (CAD) to $39 billion or 1.5 percent of GDP this fiscal year. Market participants also paid no heed towards Finance minister Arun Jaitley’s statement that the direct tax collection stood at Rs 6.48 lakh crore up to December 18, which is below the Budget estimates of Rs 9.8 lakh crore. Indirect tax collection (excluding GST collection) was at Rs 3.66 crore and the same including GST collection at Rs 7.3 lakh crore, which is below the Budget estimates of Rs 9.27 lakh crore. Finally, the BSE Sensex surged 208.80 points or 0.62% to 34,056.83, while the CNX Nifty was up by 52.80 points or 0.50% to 10,530.70.