Domestic Market View
Markets likely to make a cautious start
The Indian markets before going for a holiday had extended their gains for third straight session but ended flat with positive bias on Tuesday, while Sensex and Nifty settled at fresh closing highs, amid optimism over US-China trade talks. The markets remain closed on Wednesday for Bakri Id. Today, the markets are likely to make a cautious start amid mixed global cues. There will be some cautiousness with NITI Aayog Vice-Chairman Rajiv Kumar’s statement that he was more concerned about the rising trade deficit than the falling rupee, and called for efforts to push exports. However, traders may get some support later in the day with the SBI’s latest research report ‘Ecowrap’ stating that the country’s GDP is expected to grow by 7.7 percent in the April-June quarter on the back of pick up in leading indicators like cement production, sale of vehicles and bank credit. Traders may get some encouragement with the finance ministry’s statement that the government will meet the fiscal deficit target for the current fiscal although there could be some slippages in the current account deficit (CAD) because of high crude oil prices. Meanwhile, the US has announced hefty preliminary anti-dumping duties on metal pipes imported from India, China and four other countries, in an aggressive tactic by the Trump administration to protect the American industry and lower the trade deficit. Besides, the government has imposed restriction on import of bio-fuels including ethyl alcohol and other denatured spirits, bio-diesel, petroleum oils and oils obtained from bituminous minerals other than crude, through an amendment in import policy.
Domestic Market Overview
Benchmarks eke out slender gain; end at new all-time closing highs
Indian equity benchmarks ended the choppy day of trade with marginal gains on Tuesday, as traders took comfort with a private report stating that India has been remarkably resilient in the recent turmoil in emerging market equities largely driven by macro stability, low policy uncertainty, improving growth and domestic flows. Markets after a positive start turned flat and traded choppy in green and red terrain throughout the day. Overall sentiments remained optimistic with Retirement fund body the Employees’ Provident Fund Organisation (EPFO) payroll data suggesting that as many as 47.13 lakh jobs were created during September 2017 to June this year. Trader took some encouragement from a private report that a spectacular 53% increase in the number of income-tax returns filed electronically till July 31 has given the government renewed hope of continued high-paced growth in compliance and taxpayer base, even 21 months after demonetisation. Market participants also got some solace with Commerce and industry minister Suresh Prabhu reviewing two proposed policies- on agriculture export and new industrial policy to take the country’s exports to a new level.
Meanwhile, the Securities and Exchange Board of India (SEBI) is considering doubling or even quadrupling the minimum ticket size for investment in portfolio management services (PMS) schemes. However, gains remain capped with NITI Aayog’s statement that India needs to focus more on meeting its revenue deficit target than adhering to the fiscal deficit aim. NITI Aayog added that India needs to shift its obsession with the fiscal gap number and this obsession must end. Traders also took note with the International Labour Organisation (ILO) in its latest report title ‘India Wage Report: Wage policies for decent work and inclusive growth’ stating that the country needs to improve its wage policies. Though, it also said that low pay, gender wage gap and informality remain a serious challenge to India’s path to achieving decent working conditions and inclusive growth.
Steel sector stocks ended mixed with report that India’s steel ministry has strongly opposed the inclusion of finished steel products in the proposed regional free-trade agreement, saying it would have an adverse impact on the industry that’s recovering from a crisis. Aviation sector stocks ended in red despite report that giving in to demand from the airlines, the GST Council may propose to bring Aviation Turbine Fuel (ATF) under the indirect tax regime in its next meeting.
Global Market Overview
Asian markets end mostly in green on Wednesday
Asian equity markets ended mostly in green on Wednesday. Japanese shares closed higher, led by technology and auto companies. Risk sentiment remained supported as the dollar held above 110 yen. However, Michael Cohen, US President Donald Trump's former personal lawyer pleaded guilty to campaign finance violations and other charges and Paul Manafort, Trump's former campaign chairman was found guilty on five counts of tax fraud, weighed on market sentiments. Chinese shares ended lower, weighed down by persistent economic concerns and worries over the outlook for trade ahead of lower-level talks between Washington and Beijing. Meanwhile, markets in Malaysia, Singapore and Indonesia were closed for Hari Raya Haji.
US markets end mostly lower on Wednesday
The US markets ended mostly lower on Wednesday, with the Dow Jones Industrial Average and S&P 500 snapping a four-day gaining streak, as the minutes from the latest Federal Open Market Committee’s most recent meeting reaffirmed the central bank’s hawkish bias. The Fed minutes indicated broad-based support for another interest-rate hike in September with many officials stating that as long as economic data remain strong, it would likely soon be appropriate to take another step in removing policy accommodation. However, they also suggested that any tightening will have to pause if the US trade tensions with partners continue to escalate. Besides, cautiousness prevailed in the markets as investors sought to gauge the impact of the legal and political issues surrounding President Donald Trump’s administration. Former Trump campaign chairman Paul Manafort late Tuesday was found guilty on eight charges including tax fraud, and the president’s former lawyer Michael Cohen said he violated campaign-finance law at President Donald Trump’s direction.
Index closed a day at 11571 with gains of 20 points on Tuesday session and formed hanging man kind of candle pattern on daily chart. Above 11582 index will continue its uptrend and immediate resistance is coming near 11620-11650 zone and support is shifted near 11550-11500 zone, holding these levels we may see index to march northward in near term.
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