Markets likely to make a flat-to-positive start

Last hour buying helped Indian equity markets to end Monday’s trade on optimistic note, with Sensex settling to a fresh record high, led by gains in FMCG stocks after the Goods and Services Tax (GST) Council reduced rates on a number of products. Today, the markets are likely to make a flat-to-positive start, tracking positive cues from Asian counterparts. Traders will be getting encouragement with report that the overall exports from India to BRICS saw an upswing of 7.5% in Q1 2018 Y-o-Y in terms of total volumes, while the country's imports from BRICS nations is reduced by 3.5%. There will be some support with report that the commerce ministry is working on an export promotion strategy to boost shipments of chemicals, plastics and allied products sector to push the growth of the country's overall exports. For the formulation of the strategy, the ministry has constituted a sub-group to deliberate upon the issues of the sector. Traders will be getting some encouragement with Union Finance Minister Piyush Goyal’s statement that rising tax collections will further help reduce the tariffs. However, there will be some cautiousness with the Securities and Exchange Board of India’s (SEBI) data showing that investments through participatory notes into Indian capital markets plunged to over nine-year low of Rs 83,688 crore at June-end amid stringent norms put in place by the SEBI to check the misuse of these instruments. Meanwhile, natural rubber production declined to 6.94 lakh tonnes in 2017-18 from 7.74 lakh tonnes in 2013-14. On the other hand, consumption of natural rubber increased from 9.81 lakh tonnes in 2013-14 to 11.11 lakh tonnes in 2017-18. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended mostly higher on Monday, as investors waiting for earnings from marquee corporations to assess the impact of an escalating US-China trade row. Asian markets were trading mostly in green on Tuesday, as investors kept an eye on bond yields and the falling Chinese yuan.

Back home, bulls tightened grip on Dalal Street on Monday with Sensex hitting fresh closing high, while Nifty ending near its crucial 11,100 mark. Markets started the session on a cautious note and traded with modest gain in a very tight range in first half, as traders reacted positively to the outcome of the no-confidence motion as the day progresses. The Narendra Modi government comfortably defeated the no-confidence motion in the Lok Sabha on Friday. Though, traders remained cautious about a report that continuing their selling spree, foreign investors have pulled out over Rs 2,000 crore from the capital markets this month so far on higher crude oil prices and a depreciating rupee. The latest sell-off comes after foreign portfolio investors (FPIs) withdrew over Rs 61,000 crore from the capital markets in the last three months (April to June). Buying, which emerged in second half of the session, took markets near intraday highs as traders got support with a private report that the 10 major economies of Asia, including India, are expected to see robust growth and amount to over $28 trillion in real GDP terms on aggregate, more than the US by 2030. Some support also came with retirement fund body EPFO’s payroll data suggesting that as many as 4,474,859 jobs created during September 2017 to May this year. Meanwhile, the GST Council announced the reduction of rates on a list of 100 items, including sanitary pads, small TVs and footwear. Investors continued to take support from a report stating that ASEAN-India trade is likely to touch $100 billion by 2020 calling for greater cooperation between the two sides in economic sector. The street remained buoyed with industry chamber CII’s statement that the decision of the GST Council to cut rates and simplification of return filing process will increase the compliance rate and add to revenue buoyancy. Finally, the BSE Sensex surged 222.23 points or 0.61% to 36,718.60, while the CNX Nifty was up by 74.55 points or 0.68% to 11,084.75.