Markets to extend gains with a positive start

The Indian markets went for a strong rally in the last session after the government cut additional borrowing requirement to Rs 20,000 crore from Rs 50,000 crore notified earlier that eased worries surrounding widening fiscal deficit. Today, the start is likely to be in green on sanguine global cues. Traders may also get some support with report that direct tax collections during the first nine-and-a-half months of the current fiscal have risen by 18.7 per cent to Rs. 6.89 lakh crore. CBDT said that the collections till January 15, 2018 represent over 70 per cent of the Rs. 9.8 lakh crore revenue target from direct taxes. The banking stocks will be in focus amid reports that the government is considering a proposal to permit 100 percent FDI in private banks. Meanwhile, the Confederation of Indian Industry (CII) ahead of the GST Council meeting has called for inclusion of Petroleum and Natural Gas under GST at the earliest. Till such time as this is done, C Forms should be continued to avoid high tax incidence on these products. There will be some buzz in the telecom stocks on report that industry saw a paltry 0.14 million net addition of subscribers during December, the lowest by the industry in the 2017 calendar year. There will be some important earnings too, to keep the markets in action.

The US markets surged in the last session and the Dow closed above 26,000 for the first time ever, after the Federal Reserve's Beige Book painted a sunny picture of the US economy. Traders also got some support with report that US industrial production surged over the winter. The Asian markets have made a green start, extending this year’s stellar run, amid optimism for global growth. Energy shares gained after oil edged higher, as OPEC showed increased determination to curb production.

Back home, Wednesday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges ending the session at their all time closing high levels, surpassing 35,000 (Sensex) and 10,750 (Nifty) levels for the first time ever. After a cautious start, markets gained traction and there appeared not even an iota of profit booking in the session afterwards with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Sentiments remained up-beat after the government said it will reduce its additional borrowing to Rs 200 billion from the bond markets in the financial year 2017-18, from Rs 500 billion announced last month. This is primarily because the Reserve Bank of India will pay a higher-than-anticipated surplus to the Centre, and the dividend target from state-owned companies will also be met. Also, traders took some encouragement with a private report stating that business optimism index for the January-March quarter 2018 touched three and half year high on improving demand conditions and expectation that government sops in the budget will revive consumption. It further said that the upcoming Union Budget and assembly elections during 2018 might have generated optimism about government sops that could push revival in consumption. Markets accelerated northward journey after rating agency CRISIL enlightened that India will benefit from stronger global growth in the fiscal 2019 provided there are no more after effects from the implementation of the new Goods and Services Tax (GST) and the economy manages to tide over the asymmetry in monetary policy of advance economies together with higher crude oil prices. Some support also came with report that agricultural exports from India grew 18 per cent to $21 billion in the April-October 2017-18 period compared to just 5 per cent in 2016-17. Meanwhile, Commerce and Industries Minister Suresh Prabhu has said that India is expected to become a $5 trillion economy in the next 8-9 years with the manufacturing sector contributing 20 per cent to that. Prabhu said as commerce and industries minister, he is working on a strategy for international trade which will contribute $2 trillion to the economy where contribution can come from both manufacturing and services. Finally, the BSE Sensex surged 310.77 points or 0.89% to 35,081.82, while the CNX Nifty was up by 88.10 points or 0.82% to 10,788.55.