Markets to make a cautious start; may see some recovery in latter trade

The Indian markets went through mayhem in last session with both the major indices suffering cut in triple digit and slipping off their long held crucial support levels. Today, the start is likely to remain cautious, but some bounce back can be expected as the trade proceeds. Traders will be getting some support with report that the Cabinet is now likely to approve the Constitutional Amendment Bill on Goods and Services Tax (GST), paving the way for tabling of the new legislation in the ongoing winter session of Parliament. In a compromise formula, the Centre decided to keep petroleum out of the proposed GST in return for states agreeing to entry tax being subsumed in the new indirect tax regime proposed from April 2016. The oil marketing companies are likely to see some negative reaction with the government denying it had any plans to withdraw the recent hike in excise duty on petrol and diesel. Gold and jewellary stocks too will be buzzing with the government raising import tariff value on gold to $396 per 10 grams and on silver to $561 per kg in line with volatile global price trends. There will be some action in stocks related to retail business, as the government has stated that six proposals for foreign direct investment (FDI) in the single brand retail sector are under the process for approval.

The US markets extended their declining spree and all the major indices closed notably lower after a volatile day of trade on fluctuating price of crude oil. The Asian markets have made a mixed start with some indices still trading in red ahead of the US Federal Reserve policy decision. Japanese market has recovered from its initial fall.

Back home, Indian equity benchmarks extended the sorrow of closing in the negative terrain for the fourth straight session and got butchered by around two percentage points on Tuesday. The frontline indices’ southbound journey only halted with the close of the trading session and the key gauges even slipped below the psychological 26,800 (Sensex) and 8,100 (Nifty) levels on the back of feeble global cues. Selling was both brutal and wide-based as none of sectoral indices on BSE, barring software and technology, were spared. Counters, which featured in the list of worst performers, included metal, realty, fast moving consumer goods, public sector undertaking, healthcare and banking. The sell-off was mainly triggered after crude oil prices plunged below $60 per barrel and the failure of an emergency interest rate rise to stabilise Russia’s rouble sent another shock through global financial markets. Sentiments also remained dampened after 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. Sentiments also remained down-beat as the rupee weakened to its lowest level in 13 months on Tuesday, as markets in the region tumbled after a sharp rate hike in Russia further raised concerns about the global economy at a time when India's trade deficit is already widening. Global cues remained mixed with Asian markets ending mostly in the red, while European shares made a positive start. Back home, profit booking by foreign institutional investors in the previous sessions also weighed on market sentiment. The foreign institutional investors were net sellers in Indian equities worth Rs 455.72 crore on December 15, 2014, as per provisional stock exchange data. Meanwhile, stocks related to metal space edged lower in trade after dismal Chinese data. Besides, Auto stocks too succumbed to selling pressure after reports suggested that government might not continue to extend excise duty concessions to the automobile sector beyond December 31, 2014. Additionally, banking stocks too cracked in trade after reports casted doubts on RBI’s ability to cut rates in upcoming monetary policy meet in February. Finally, the BSE Sensex declined by 538.12 points or 1.97%, to 26781.44, while the CNX Nifty lost 152.00 points or 1.85% to 8,067.60.