Markets to start the new month on a cautious note

The Indian markets went for a huge rally in last session and the major indices touched fresh all times high with BSE market capitalization crossing the historical Rs 100 lakh crore mark for the first time. Today, the start of the new month is likely to be flat-to-cautious and traders will be reacting to the GDP data. The economy slowed in second quarter at 5.3 per cent from 5.7 per cent in the previous April-June quarter, dragged down by the poor performance of the manufacturing sector. Though, the numbers were much better than the street expectations and the GDP growth for the first half of the year, April-September stands at 5.5 per cent as against 4.9 per cent in the same period last year. Today, there will be some buzz in the gold related stocks, as in an unexpected move the government has decided to withdraw the 20:80 scheme and other restrictions placed on import of gold. The PSU oil marketing companies too may remain in action, as amid declining international crude price they have announced reduction in petrol and diesel prices. Petrol price has been cut by 91 paise a litre, and diesel by 84 paise per litre. The telecom sector stocks too may keep buzzing with Minister for Communications and Information Technology Ravi Shankar Prasad’s statement that 750,000 km of cable is proposed to be laid over next three and a half years to provide broadband in every village of the country. The auto and cement companies will be in action on reporting their monthly sales numbers.

The US markets made a flat closing in last session, as the energy stocks dragged in light and short trading session, though traders mainly remained on sidelines lacking any major economic data announcement. The Asian markets have mostly made a soft start after report of a drop in Chinese manufacturing gauge. China’s official factory index fell to 50.3 for November, though the Chinese market was moving higher for the eighth day.

Back home, Indian markets after snapping the November series on an impressive note made a triumphant start of the new series with both the benchmarks rallying to new highs, posting over a percent gains for the day. Benchmarks after a gap-up start never showed any sign of profit booking and kept on strengthening. Although there was cautiousness about the second quarter GDP data to be announced after the market hours, which was likely to have slowed, traders largely concentrated on the big news from the global front, where crude prices slumped to their lowest level since May 2010, after the Organization of the Petroleum Exporting Countries (OPEC) decided not to cut output at the conclusion of its highly-anticipated meeting. OPEC said that it would keep its official production target unchanged at 30 million barrels a day. Fall in crude prices is a boon for importers like India, which imports about 70 percent of its petroleum requirement. Decline in crude prices results into lower inflation, improvement in fiscal and current account balances and also in higher growth. The Asian markets made a mixed closing, while the European markets made a soft start dragged down by decline in energy shares for the fifth day. Back home, the bulls went berserk on the Dalal Street with all the sectoral indices along with broader markets posting considerable gains. The most buzzing sector of the trade was banks with eight of the BSE banking index' twelve constituents, touching new yearly highs. Though, the RBI is not likely to cut interest rate in its upcoming monetary policy review but the slump in crude prices seemed paving the way for a favourable decision from the RBI early next year. There was another development related to the sector with State Finance Minister stating that the government is considering a plan to reduce stakes in state-run banks to 52 per. The reduction of government of India share in equity capital of PSBs to 52 per cent will enable mobilisation of about Rs 89120 crore. With the decline in crude prices not only the PSU OMCs were in jubilant mood but other companies whose large raw material is crude based, especially paint companies, they too surged. Finally, the BSE Sensex surged by 255.08 points or 0.90%, to 28693.99, while the CNX Nifty soared by 94.05 points or 1.11% 8,588.25.