Markets to make a mildly positive start on supportive global cues

The Indian markets consolidated in the last session and paring their early gains ended flat, with traders eyeing third-quarter corporate earnings results due later this month for directional cues. Today, the start is likely to be in green on supportive global cues, traders may also be reacting to the last day’s report of  manufacturing PMI rising to 54.7 in December 2017 from 52.6 in November on the back of robust improvement in the health of the sector since December 2012. Meanwhile, the government has notified lower 1 percent GST rates for manufacturers who have opted for composition scheme as well as easier norms for traders opting for it. The notification stipulates that manufacturers who have opted for composition scheme will now have to pay 1 percent Goods and Services Tax (GST) as against 2 percent earlier. Also, there will be some support with the Rajya Sabha unanimously passing the Insolvency and Bankruptcy Code (Amendment) Bill that replaces an Ordinance that prevents “unscrupulous persons from misusing or vitiating the provisions of the Insolvency and Bankruptcy Code”. There will be some buzz in the telecom sector stocks, as the Telecom Regulatory Authority of India (Trai) has released a detailed set of regulations for interconnection pacts between operators and mandated a daily penalty of Rs 1 lakh per circle for non-compliance of these norms.

The US markets made a positive start of the New Year as traders are expressed optimism about the outlook for the markets and the economy going into the New Year. Both the S&P and the Nasdaq hit intraday records in the final minutes of trading. The Asian markets have made mostly a positive start and equities extended gains after a rally in technology companies’ boosted US stocks to record highs, while the Japanese markets remained closed.

Back home, Indian equity benchmarks ended the choppy day of trade on quiet note on Tuesday, as traders remained on sidelines ahead of corporate results for the third quarter FY18 to be released later this month. After a positive start, markets turned choppy and altered between green and red throughout the session to end flat. Though, traders took some support with report that the eight core industries growing by 6.8% in November 2017, compared to the production during November 2016. The growth in November was driven by a 16.6% increase in steel production over November 2016. Traders also got some solace with government’s decision to ease norms for rectification of GST returns. The Finance Ministry has permitted businesses to rectify mistakes in their monthly returns - GSTR-3B - and adjust tax liability, a move that will help them file correct returns without fear of penalty. Better than expected Nikkei India Manufacturing Purchasing Managers’ Index (PMI) too provided some comfort to the market participants. The seasonally adjusted Manufacturing PMI rose to 54.7 in December from 52.6 in November, indicating a healthy growth in manufacturing sector since December 2012. However, traders remained concerned with report that retail inflation for industrial workers rose to 3.97% in November 2017 as compared to 3.24% for the previous month, mainly due to surge in prices of food items, kerosene and cooking gas. The year-on-year inflation measured by monthly CPI-IW (Consumer Price Index-Industrial Workers) stood at 3.97% for November, 2017 as compared to 3.24% for the previous month (October, 2017) and 2.59% during the corresponding month (November 2016) of the previous year. The traders took note of report which has pointed oil, inflation as risk factors, stating that India's economic growth is likely to pick up in the New Year but rising oil prices and a firming inflation may spoil the party. Finally, the BSE Sensex slipped 0.49 points to 33,812.26, while the CNX Nifty was up by 6.65 points or 0.06% to 10442.20.