Markets to make cautious start on Tuesday

Indian equity markets ended higher on Monday on the back of buying by participants, tracking positive global sentiment stemmed from trade truce between the US and China. Today, the start of the session is likely to be a cautious on some sluggish regional cues. Traders will remain concern on report that Goods and Services Tax (GST) receipts in June fell to Rs 99,939 crore, down from over Rs 1 trillion in the previous month. The total gross GST revenue collected in the month of June, 2019 was Rs 99,939 crore of which Central-GST was Rs 18,366 crore, State-GST was Rs 25,343 crore, Integrated-GST was Rs 47,772 crore (including Rs 21,980 crore collected on imports) and cess was Rs 8,457 crore (including Rs 876 crore collected on imports). There will be some cautiousness too with India Meteorological Department’s statement that Monsoon deficiency in June this year was the highest for the month since 2015. The month ended with 33 per cent deficiency which translates to around 67 per cent of the Long Period Average (LPA). Several parts of the country have been witnessing drought-like situation. The Central Water Commission data revealed that as on June 27, of the 91 major reservoirs in the country, 62 water bodies reported 80 per cent or below normal storage. However, traders may take some support later the day on report that the eight core sector industries recorded a growth of 5.1 per cent in May on the back of healthy output in steel and electricity. The eight core sector industries - coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity - grew by 4.1 per cent in May last year. Steel and electricity output increased by 19.9 per cent and 7.2 per cent, respectively, during the month under review. The MSMEs stocks will keep buzzing on report that Govt is working on new credit scheme for MSMEs to encourage job creation.

Asian markets are trading mostly higher on Tuesday after the US and China over the weekend agreed to a timeout in their tariff war and agreed to resume trade negotiations. The US markets ended higher on Monday after President Donald Trump and Chinese President Xi Jinping agreed to restart stalled trade negotiations.

Back home, Indian equity benchmarks gave a firm start to the month of July, with Sensex and Nifty closing higher by around 300 and 80 points, respectively. The start of the day was fabulous, as the Reserve Bank of India (RBI) relaxed the leverage ratio (LR) for banks to help them boost their lending activities. The leverage ratio stands reduced to 4% for Domestic Systemically Important Banks (DSIBs) and 3.5% for other banks effective from the quarter commencing October 1, 2019. The street remained enthusiastic amid report that the finance ministry will come up with further reforms in the indirect tax system with the introduction of new return system, rationalization of cash ledger system and a single refund-disbursing mechanism, among others. Rally continued throughout the day, amid report that foreign investors infused a net amount of Rs 10,384 crore into the Indian capital markets in June and remained net buyers for the fifth month in a row on expectations of continued economic reforms. Some support also came with a report stating that the government is working on a proposal to extend tax benefits to retail investors in its two exchange-traded funds - CPSE and Bharat-22 ETF. Optimism remained among market participants, even though Indian manufacturing sector lost growth momentum in the month of June, on the back of softer increase in output. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) eased to 52.1 in June from 52.7 in May. Finally, the BSE Sensex gained 291.86 points or 0.74% to 39,686.50, while the CNX Nifty was up by 76.75 points or 0.65% to 11,865.60.