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Markets to make negative start on feeble global cues

Indian equity benchmarks ended lower on Friday on profit booking. Today, the start is likely to be weak tailing the sluggishness in the global indices. Traders will be cautious as the country’s foreign exchange reserves declined by USD 1.34 billion to USD 641.113 billion in the week ended September 10, 2021, according to RBI data. During the reporting week ended September 10, the fall in the reserves was on account of a decline in Foreign Currency Assets (FCAs), a major component of the overall reserves.

Traders may take note of report that President Ram Nath Kovind said the Covid pandemic hit the country's economy hard and the government has taken various fiscal measures to alleviate distress and help the poor. However, some respite may come later in the day as Commerce and Industry Minister Piyush Goyal said simplification, facilitation and ease of doing business has helped India create more startups. He said for promoting startups, the government is creating future global leaders and wants to become the innovation hub of the world.

Markets may get some support as the GST Council in its meeting stated that businesses that default on filing summary return and paying monthly GST will not be able to file GSTR-1 sales return of the succeeding month from January 1 next year. It has decided to take a host of measures to streamline compliance, including mandatory Aadhaar authentication for businesses to file refund claims. These moves would help prevent revenue leakage due to evasion of Goods and Services Tax (GST), which was launched on July 1, 2017.

Meanwhile, after the World Bank announced its decision to discontinue the next Doing Business ranking report, a senior government official said the move will not have any impact on the investment climate in India. India’s ongoing reforms to improve business climate will continue. There will be some reaction in Aviation stocks as the Ministry of Civil Aviation stated that airlines can now operate a maximum of 85 per cent of their pre-Covid domestic flights instead of the 72.5 per cent allowed till date.

There may be some buzz in pharmaceutical sector’s stocks on report that the government extended the period of concessional GST rates on certain COVID-related drugs by three months till December 31 but decided not to give the same benefit to medical equipment. The concessional regime for certain medical equipment will end on September 30.

The US markets end lower on Friday as investors remain cautious due to a resurgent Covid virus, a Federal Reserve meeting next week and a historical tendency for September to be a weak month for equities. Asian markets are trading mostly lower in early deals on Monday ahead of a week graced with no less than a dozen central bank meetings, highlighted by the Federal Reserve which is likely to take another step toward tapering.

Back home, in a volatile session, Indian equity benchmarks erased all of their day’s gains after lifetime highs and ended marginally lower on Friday amid profit booking. Markets made a strong opening, as sentiment got a boost with Union Finance Minister Nirmala Sitharaman’s statement that the National Asset Reconstruction Company (NARCL) would be operational soon, and it had to ensure resolving bad loans within five years, beyond which the guarantee to be issued by the government would expire.

The Cabinet approved a government guarantee of Rs 30,600 crore to be provided for the security receipts issued by the NARCL to buy bad loans of lenders. Further, support also came in as the Reserve Bank of India (RBI) said prospects are brightening for the Indian economy achieving ‘escape velocity’ from the pandemic as the second wave of COVID-19 wanes and preparedness for future remains on war-alert status

. It said aggregate demand is gaining firmer ground, while on the supply side, IIP and core industries mirror improvement in industrial activity and services sector indicators point towards sustained recovery. However, the market witnessed a late bout of profit-taking towards the closing stages. Traders overlooked India Ratings’ report stated that with the resumption of economic activity, the collection efficiency for securitisation transactions moved up from 67 per cent in May 2021 to 79 per cent in July. However, it is yet to reach March 2021 levels of 83 per cent.

Meanwhile, in order to rave up the innovation and entrepreneurship ecosystem across the country, Atal Innovation Mission (AIM) NITI Aayog has inked partnership with Dassault Systemes. In this regard a Statement of Intent (SoI) was signed between AIM and Dassault Systemes in a virtual event to support various current and future initiatives of AIM programs and AIM beneficiaries in India. Finally, the BSE Sensex fell 125.27 points or 0.21% to 59,015.89 and the CNX Nifty was down by 44.35 points or 0.25% to 17,585.15. 

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