Markets to continue the somber mood with a negative start

The Indian markets are likely to extend the somberness of last week with a negative start, reacting to the weak industrial output data announced late Friday that fell by 4.2 per cent in October compared to 2.5% growth in September, led by a 7.6 per cent fall in manufacturing output. However, Retail inflation dropped to 4.4 per cent in November- largely led by falling vegetable prices, and that may soothe some nerve. Also, there is report of credit growth surging at 4-month high, n the two-week period ended August 8, loan growth was 11.6 per cent. There will be some buzz in the railways, and shipping related stocks on report that the centre is planning to set up a Railway Corporation exclusively to build rail connectivity to 12 major ports. Power stocks too are likely to be in action, as the international rating agency Fitch Friday retained its stable outlook on India's power sector in 2015 but warned producers and grid operators will continue to face challenges by way of high capex levels and fuel shortages leading to negative free cash-flow in the medium-term.

The US markets slumped in last session on global growth concern and plunge in crude prices, overlooking the upbeat report of consumer sentiments. The Asian markets have mostly made a soft start and the Hang Seng and Japanese market were leading the losers pack. Confidence of Japan’s large manufacturers declined in the fourth quarter, the Tankan’s big manufacturer index slipped to 12 in December from 13 in September.

Back home, Friday was a very volatile day of trade for the Indian markets and the major benchmarks that were moving in and out of the red for most part of the session, suffered sharp selling towards the end to finish lower by about a percent. Although after a flat start the markets showed some strength but the latter part of the trade was only repetition of what has been happening for last few sessions, traders opting to book profit at every upmove, dragging the markets lower. There was some cautiousness ahead of major macro data announcements of Consumer Price Index (CPI)-based inflation for the month of November and Index of Industrial Production (IIP) data for the month of October, later in the day. The continued weakness in the domestic currency too weighed on the market sentiments, which slipped further to its ten months low. The global cues though remained positive as the US markets ended higher after getting some upbeat economic data; while the Asian markets ended mostly in green, while the European markets made a weak start with UK stocks sliding for a fifth day, amid prospects of a snap parliamentary election in Greece. Back home, disappointment continued on the Dalal Street with another day of gloom and markets found it hard to protect their crucial support levels, fearing policy logjam even with the new government, after the states rejected the draft of Goods and Services Tax (GST) Bill, underscoring that it does not address their concerns, particularly on entry tax and taxation of petroleum products. Though, the government was looking hopeful of bringing the bill in the very winter session of the parliament on initiative of the finance minister Arun Jaitley. Back on street, there was hardly any attempt of recovery for the markets during the session and bulls were running for shelter amid the widespread selling. All the sectoral indices barring the defensive healthcare, ended in red led by consumer durables, capital goods, oil & gas and realty which suffered cuts of over two percent each on the BSE. The telecom stocks that were buzzing in early trades on report that government may include one slot for 3G services in spectrum auction, too made a mixed closing. Finally, the BSE Sensex plunged by 251.33 points or 0.91%, to 27,350.68, while the CNX Nifty lost 68.80 points or 0.83% to 8,224.10.