Markets to make a flat but positive start

The Indian markets traded with traction and ended the last session at their record closing high levels amid reports that GST Council decided to cut tax rates on 29 products and 53 services, in what is seen as the biggest overhaul since the launch of the Goods and Services Tax (GST). Today, the start is likely to be slightly in green, as traders may take some encouragement with report that overseas investors have put in a whopping Rs 87 billion in the Indian capital markets this month so far on expectation of recovery in corporate earnings and attractive yields. This follows an investment of Rs 2 trillion in the capital markets (equity and debt) in the entire 2017. Some support may also come with IMF Chief Christine Lagarde and Norway’s Prime Minister Erna Solberg’s statement that raising women’s participation in the labour force to the same level as men can boost India’s Gross Domestic Product (GDP) by 27 per cent. Meanwhile, telecom stocks will be in focus with the Department of Telecom (DoT) keeping an open mind on the timing of the next round of spectrum auction and will await regulator Trai’s report before firming its views. Steel stocks will also be buzzing on report that the steel ministry is in talks with Railways to ensure adequate availability of rakes for industries that have been saying the problem has led to a shortage of raw materials at plants. There will be lots of important earnings announcements to keep the market buzzing for the day.

The US markets ended higher on Friday, as traders remained optimistic about the outlook for the economy and corporate earnings overshadowed concerns about a government shutdown at midnight. Traders also overlooked report from the University of Michigan showing an unexpected deterioration in consumer sentiment in the month of January. Asian markets have made a mixed start, as investors kept an eye on political developments in the U.S. after a government shutdown began last week.

Back home, Friday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls tightened their grip on Dalal Street, with Sensex conquering its crucial 35,500 level, Nifty end just shy of 10,900 mark for the first time ever. Despite some initial hiccups, domestic bourses gained momentum and traded in green terrain for most part of the day, but rally in last leg of trade mainly helped markets to end at fresh record high levels. Sentiments remained up-beat, as traders took some encouragement with India Ratings and Research’s projection that the country’s economic growth will improve to 7.1 percent in the next fiscal year 2018-19 from 6.5 percent in the current year 2017-18. It said that the growth will be supported by robust consumption demand and low commodity prices. Traders also reacted positively on report that GST Council decided to cut tax rates on 29 products and 53 services, in what is seen as the biggest overhaul since the launch of GST. Finance Minister Arun Jaitley also said that the panel at its next meeting may also consider bringing under the Goods and Services Tax (GST) purview items like petroleum and real estate which are currently outside the new regime. At one point of time it looked like markets will end up near neutral lines, but rally which emerged in final hour of trade mainly pulled markets higher to end at their fresh all time high levels. Sentiments remained optimistic with Union Minister Suresh Prabhu’s statement that the commerce ministry is working on a strategy to diversify India's export basket in a bid to boost shipments. Some support also came with Vice-President M Venkaiah Naidu’s statement that various decisions of the central government, including demonetisation and GST, are likely to have a positive impact in the coming years. Finally, the BSE Sensex surged 251.29 points or 0.71% to 35,511.58, while the CNX Nifty was up by 77.70 points or 0.72% to 10,894.70.