Markets likely to start the new series on a cautious note

The Indian markets continued their declining trend in last session with benchmarks losing their crucial psychological levels. Today, the start of the new series is likely to be a bit cautious, but traders may go for some value buying and recovery can be expected. Traders will also be getting some support with a report that the government is pushing ministries to ensure mechanism for faster clearances. The Prime Minister's Office has shot off letters to the ministries and departments concerned, asking them to expedite implementation of tasks identified as being their responsibility. There will be some buzz in the edible oil companies, as the government has hiked import duty on both crude and refined edible oil by 5 percent to protect the interest of domestic farmers and oil processors amid fall in global prices. The customs duty on crude oil has been increased to 7.5 percent from 2.5 percent earlier. There will be some action from power gauge too, as the shortfall in electricity supply, or peak power deficit declined to 3.7 percent in last month from 4.4 percent in October. On the same time it has been reported that the leading private sector power players have come together deciding not to bid for upcoming ultra mega power projects (UMPPs) of 32,000 MW after the government decided to accept the sole bid of state-run NTPC for Rs 50,000 crore Tamil Nadu & Orissa UMPP.

The US markets ended flat in last session on getting positive jobless claims data, while the Asian markets have mostly made a positive start led by the Chinese market which has extended its biggest gains in three weeks, as the People’s Bank of China plans to temporarily waive a requirement for lenders to set aside reserves for some deposit. On the other hand the Japanese market was down marginally, as Japan’s inflation rate slowed for a fourth straight month, while Industrial production in November fell 0.6 percent from the previous month.

Back home, Indian equity markets truly depicted the choppiness of F&O expiry session on Wednesday and after a cautious start extended their southward journey to close with a cut of over a percentage point. Final hour of trade proved to be the curse for the markets and bourses settled below their crucial 27,250 (Sensex) and 8,200(Nifty) bastions. After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade as investors offloaded their positions an hour before the end of F&O contract expiry day. Sentiments remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 444.93 crore on December 23, 2014, as per provisional data. Investors failed to draw any solace from the reports that the direct tax collections during April-November of this fiscal rose 5.67 percent to Rs 3.29 lakh crore over the same period a year ago. Also, market-participants failed to draw any sense of relief from Reserve Bank, Chief Economic Adviser Arvind Subramanian’s statement that there is a need to boost investments to achieve the potential economic growth rate of 7-8 percent in the next few years. Industry body, Ficci too has said that interest rate reduction will boost investment cycle. On the global front, European counters traded mixed in early deals, while Asian markets ended mostly in the green. Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. Meanwhile, shares of three public sector oil marketing companies i.e. BPCL, HPCL and IOC edged lower as Brent crude oil futures gained $1.58 a barrel on December 23, 2014 and as rupee continue to weaken against the dollar. On the flip side, shares of companies operating insurance business edged higher on reports that the Union Cabinet at a meeting today, approved issuing an ordinance to raise foreign investment ceiling the insurance sector. Moreover, shares of three companies like Opto Circuits, Advanced Micronic Devices and Poly Medicure surged after the Union Cabinet gave its approval to amend the existing FDI policy in the pharmaceutical sector to create carve out for medical devices. Besides, Shares of UltraTech Cement, ACC, and Ambuja Cements firmed up on reports that these companies have hiked cement rates by Rs 10-25/bag. Finally, the BSE Sensex plunged by 297.85 points or 1.08%, to 27208.61, while the CNX Nifty dropped by 92.90 points or 1.12% to 8,174.10.