The Indian markets extending their gains for the holiday truncated week had made a modestly positive close in last session and the benchmarks ended at record highs. Today, the start is likely to be cautious on mixed global cues and some consolidation can be expected and traders will be reacting to a report that G20 failed to agree on free trade amid rising protectionism, even though they reiterated their resolve to avoid competitive currency devaluation. Traders will be eyeing the rupee movement too, which has continued its surge to near 16 months high on dollar weakness in overseas markets and increased foreign fund inflow. There will be some buzz in the PSU banking stocks as the government has laid down strict conditions for capital infusion in PSU banks, which includes active bad loan management, arranging capital from the market, a continuing plan for selling non-core assets, shutting money-losing branches and temporarily paring employee benefits, if necessary. There are also reports that government is considering a proposal to shuffle the heads of some state-run lenders in a bid to solve their bad loans issue and boost financials.
The US markets made a flat closing with mostly a negative bias, the trade remained choppy, as traders continued to digest Wednesday's closely watched monetary announcement from the Federal Reserve and largely shrugged off the latest batch of U.S. economic data. The Asian markets have made a mixed start, with some indices trading in red as the risk appetite was missing and some of the indices are coming off their best week since January after central banks in the U.S. and China raised interest rates.
Back home, Friday's trading session was clearly of consolidation as the Indian benchmark indices appeared a bit fatigued and remained in tight range throughout the day. Nevertheless, the benchmarks managed to extend the winning momentum for the second consecutive day of trade as local sentiments got a boost after the goods and services tax (GST) council on Thursday gave its nod to the two remaining pieces of supporting legislation for implementing the landmark tax reform, paving the way for their introduction in Parliament and state legislatures. The council's approval for the state GST and Union territory GST bills marks an important step in India's journey towards creating a unified market and is critical to meeting the deadline of July 1 for GST implementation. Adding optimism among investors, HDFC Chairman Deepak Parekh said the GST regime can push up the country’s growth by as much as 150-200 basis points (bps). India's GDP for the third quarter ended in December 2016 recorded a growth of 7%. The estimate of GDP growth for the full fiscal 2016-17 is 7.1%. Meanwhile, IT stocks, which get bulk of their revenues from exports to the US, edged higher after Indian rupee, snapping its four-session long gains, fell 24 paise to 65.65 against the dollar on Friday. Also, IT Minister Ravi Shankar Prasad on Friday said the government had voiced its concern regarding the H1-B visa issue to the US and added that Indians do not steal but create jobs. Further, cigarette stocks such as ITC surged after the GST Council capped the cess on tobacco and cigarettes at 290% or Rs 4,170 per 1,000 cigarette sticks. Finally, the BSE Sensex surged 63.14 points or 0.21% to 29648.99, while the CNX Nifty was up by 6.35 points or 0.07% to 9,160.05.