Markets to open marginally in green on Wednesday

Indian markets ended at record closing highs on Tuesday after Reserve Bank of India (RBI) Governor Shaktikanta Das hinted at further rate cuts. Today, the markets are likely to continue their record run with slightly positive start tracking gains on Wall Street amid continued FPI inflows. Investors will be eyeing the goods and services (GST) Council meet due later in the day. The Council is expected to review the taxation structure for shoring up the revenue as lower-than-expected collections has led to a delay in compensation payment to states. Market participants will be getting some support as Defence Minister Rajnath Singh said that India is impacted to some extent by the global economic slowdown but expressed confidence that the country will come out of the difficult situation within a short time. Also, some support will come with Crisil’s report that farmers are likely to generate 7-9% more in profit during the crop year 2019-20 (July-June) because of an increase in overall prices of farm commodities on lower kharif yield and higher productivity from rabi crops. Besides, as per a private report, the government is likely to trim personal income tax rates and cut the tax on long-term capital gains from equity investments in its next budget, in a bid to spur economic growth. Traders may take note of report that the revenue department has launched measures to boost tax collections for the next four collection months, asking senior officers to achieve targets. Though, there may be some cautiousness with the International Monetary Fund (IMF) chief economist Gita Gopinath’s statement that IMF will revise estimates for India’s economic growth in January, which will be a significant downward cut over the previous estimate. IMF currently projects India to grow at 6.1% in 2019 and 7% in 2020. Telecom stocks will be in focus as the Telecom Regulatory Authority of India (TRAI) deferred by a year a plan to abolish interconnection usage fees (IUC) that operators pay each other for calls made from one network to another. Meanwhile, Prince Pipes and Fittings, one of India's leading pipe and fitting manufacturers, is slated to open its initial public offering (IPO) on December 18.

The US markets ended slightly higher on Tuesday as manufacturing and housing data topped expectations, just as the sugar rush of a partial trade deal between America and China began to wear off. Asian markets are trading mixed on Wednesday as investors take a breather after the partial US-China trade deal.

Back home, Indian equity benchmarks scaled fresh record closing highs on Tuesday’s trading session, with the Sensex and the Nifty gaining around a percent each. Key indices made a positive start of the day, aided with the Commerce and Industry Minister Piyush Goyal’s statement that the tax reforms introduced by the government recently will ensure investments come back to India. Traders remained optimistic, as Union Minister Nitin Gadkari approved changes in the Interest Subvention Scheme guidelines for micro, small and medium enterprises, and said the modifications are expected to boost their productivity through access to credit at reduced cost. Extending their northward rally of the day, markets settled with strong gains, on the back of positive cues from Asian markets. The street got comfort, after the central government released Rs 35,298 crore to states to make up for the loss of revenue due to rollout of the Goods and Services Tax (GST). Separately, Economic Advisory Council of the Fifteenth Finance Commission discussed issues related to GST stabilisation and possible ways to improve tax collection for additional resource mobilisation. Advisory Council was informed about submission of the 2020-21 report and now the Commission is on its next task of preparing the report for 2021-26 period. Finally, the BSE Sensex gained 413.45 points or 1.01% to 41,352.17, while the CNX Nifty was up by 111.05 points or 0.92% to 12,165.00.