Markets likely to make optimistic start of F&O expiry session

Indian markets ended higher on Wednesday amid speculation the government may rationalize the tax structure for equities by November-end. Today, the start of the F&O series expiry session is likely to be optimistic following positive global cues coupled with fall in crude oil prices. There will be some encouragement with the Economist Intelligence Unit’s report stating that India and China are projected to see accelerated economic growth in the fourth quarter of this year, bucking trends in the US and the European Union. It added that the real GDP growth of India in the December-ending quarter is expected to be the highest among G7 and BRICS nations. In the third quarter, India's real GDP growth is estimated to be 1% on a quarter-on-quarter basis and is projected to rise to 2.20% in the fourth quarter. Traders may take note of report that Commerce and industry minister Piyush Goyal has assured that startups will never be harassed and that the government is taking steps to promote them. The minister said the government has come out with clarifications that startups would not be asked any questions if they are registered with and recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). However, there may be some cautiousness with report that the government is unlikely to moderate personal income tax rates for the rich due to fiscal stress on account of lower tax realisation amid slowdown in the economy. There will be some buzz in the power stocks with ICRA’s report that progress on stressed thermal power asset resolution remained slow as only 10% of affected generation capacity witnessed resolution despite several steps taken by the government and lenders. Telecom stocks will be in focus as the Telecom Regulatory Authority of India released the amended broadcasting and cable services interconnection regulations to ensure a fully-compliant audit regime. There will be some reaction in sugar stocks with report that the government's Rs 15,000-crore soft loan programme for sugar mills to set up ethanol units is moving at a very slow pace as banks have so far disbursed only about Rs 800 crore. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended in green on Wednesday as investors cheered the Federal Reserve’s third rate cut of the year and comments from Chairman Jerome Powell that signaled it would be a while before the central bank hikes rates. Asian markets are trading mostly higher on Thursday after the US Federal Reserve cut interest rates as expected to keep the economic expansion on track.

Back home, bulls continued to roar on Dalal Street on Wednesday’s trading session, with Sensex and Nifty closing higher by around half a percent. The start of the day was firm, amid reports that the Department for Promotion of Industry and Internal Trade (DPIIT) has kick-started an exercise to relax India’s foreign direct investment (FDI) norms. The department held an inter-ministerial meeting to discuss further opening up in sectors, especially where 100% FDI is not allowed on the automatic route. The street got comfort, after Finance Minister Nirmala Sitharaman exhorted India Inc to expand CSR reach to poor states like Jharkhand, Chattisgarh, Bihar and North East region. Indices traded with traction during whole day, aided with a report that the finance ministry & regulators are reviewing the possibility of scrapping the dividend distribution tax. It is also considering rationalisation of the long-term capital gains taxation structure by classifying three asset classes against six at present. However, traders were seen taking a note of a private report that following the surprise move to cut corporate taxes last month, speculation is high that a reduction in personal income taxes is on the cards next in India. With the all-in corporate tax rate at 25 per cent, it is likely that personal income tax rates, which are at 30 per cent plus levels, will also be lowered, surcharges notwithstanding. Finally, the BSE Sensex gained 220.03 points or 0.55% to 40,051.87, while the CNX Nifty was up by 57.25 points or 0.49% to 11,844.10.