Markets to keep reeling in red tailing feeble global cues

The Indian markets after a very choppy last session managed to end flat. Today, the start is likely to remain weak tailing the somberness in global cues. Although, there is good news for India Inc. with the government agreeing to several demands raised by the states, paving the way for the introduction of the Constitution Amendment Bill during the current session of Parliament for introducing the GST from April 2016. Traders will be pressured from the economy front, where India’s trade deficit widened to the highest in 18 months in November to $16.86 billion, compared with $9.57 billion a year earlier and $13.35 billion in October, due to increased gold imports. Though Finance Minister Arun Jaitley has said that India has the potential to grow at a higher rate even at a time when the world economy is going through a critical phase. There will some buzz in the PSU oil marketing companies after Petrol and diesel prices were cut by Rs 2 per litre each as international oil prices slumped to five-year low.

The US markets ended lower in last session, extending previous session losses although the US manufacturing output recorded its largest increase in nine months in November on the back of across the board expansion of production. The Asian markets have mostly made a weak start on weaker crude. Chinese market was bucking the trend despite a preliminary index of Chinese purchasing managers index signaling contraction.

Back home, extending their southward journey for yet another session, Indian equity benchmarks ended the session slightly in the red on Monday amid choppy trades. Sentiments remained dampened since start of the trade as investors reacted negatively 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, losses remained capped after data showed that India’s wholesale price index-based inflation for November was down to 0% compared to its October level of 1.7%. The reduction in WPI was mainly on account of sharp decline in inflation for ‘Fuel & Power’ group, followed by Inflation in Primary Articles. The index for ‘Fuel & Power’, which occupies 14.91% weightage in the overall index, declined by 5.4% to 199.3 (provisional) from 210.7 (provisional) for the previous month. Meanwhile, retail inflation as measured by the Consumer Price Index (CPI) eased sharply by 114bps to 4.38% during November 2014 as compared to 5.52% in October 2014. Global cues remained mixed with European counters making a positive opening and trading higher in early deals on Monday. However, Asian shares ended near nine-month lows as oil prices sank to fresh 5-1/2 year lows on concerns about a supply glut and slower global growth. Back home, shares of information technology (IT) were under pressure and ended lower by up to 4% after Tata Consultancy Services (TCS) in an investor update communicated for a weak revenue growth for the current (October-December) quarter. Oil and gas shares were under pressure as global crude prices are expected to fall further on weaker demand and increased supply. On the flip side, shares of state-owned companies Oil and Natural Gas Corporation (ONGC) and Coal India ended higher on reports that the government has decided to defer disinvestments plan in both these companies until January. Finally, the BSE Sensex declined by 31.12 points or 0.11%, to 27,319.56, while the CNX Nifty lost 4.50 points or 0.05% to 8,219.60.