Last session of the calendar year to get a cautious start

The Indian markets after a choppy trade managed a flat closing in last session, though the traders looked in holiday mood and preferred to remain on sidelines. Today, the start of the final session of year 2014 is likely to be a bit cautious, though traders will be getting some support with the government stating that to boost manufacturing sector, it intends to develop industrial corridors and smart cities for providing infrastructure based on modern technology with high-speed communication. While, there is good news for foreign investors too, as the government in its quest for attracting maximum foreign investment, has amended the Arbitration Act to make it mandatory for a judge presiding over commercial disputes to settle cases within nine months. There is likely to be some somberness in consumer durables and auto, as the finance ministry has decided not to extend excise duty cuts on automobiles and consumer durables beyond December 31, in order to meet the Budget target of reining in the fiscal deficit at 4.1 per cent of gross domestic product. There will be some buzz in the PSU oil marketing companies on report that the government is pushing the state-run oil marketing firms to pass on the benefit of falling global prices to consumers as a New Year’s gift.

The US markets ended lower in last session, although the selling pressure remained low but the major averages ended the day firmly in negative territory, weighed down by the weakness in the overseas markets. The Asian markets have made a mixed start led by the Japanese market which is down by over a percent on yen strength. However, the Chinese market was trading in green despite country’s factory gauge sinking to a seven-month low in December.

Back home, Tuesday’s trading session turned out to be a choppy day of trade for Indian equity benchmarks where key indices managed to keep their head above water with Sensex recapturing its crucial 27,400 mark, while Nifty ended tad below its crucial 8,250 mark. Buying in last leg of trade mainly prevented a down day of trade at Dalal Street as markets for couple of times surrendered to selling pressure, though only to bounce back in green. Overall, sentiments remained up-beat as investors got some confidence from Finance Minister Arun Jaitley’s statement where he pitched for a rate cut by the RBI, saying that the credit offtake is slow, infrastructure creation becomes slower, and the manufacturers find it difficult to afford costly capital, because it is going to add to each one of their costs. Sentiments also got some boost, as the Union Cabinet cleared ordinance on Land Acquisition Act including removal of consent clause for acquiring land for five areas of industrial corridors, PPP projects, rural infrastructure, affordable housing and defence. However, gains remained capped as traders remained concerned with the Reserve Bank of India’s (RBI) Financial Stability Report (FSR), stating that risks to India’s banking system continue to remain at elevated levels on concerns of further deterioration in the asset quality. The central bank has warned that banks’ bad loans will worsen if economy falters further. Sentiments also got hurt on reports that, foreign portfolio investors (FPIs) sold shares worth a net Rs 204.22 crore on December 29, 2014, as per provisional data. Weak global cues too dampened the sentiments with European markets making a negative start, Asian markets too ended mostly in the red. Back home, appreciation in Indian rupee supported the sentiments. Meanwhile, Infrastructure stocks extended their jubilation for second straight day after the Cabinet approved ordinance on amendments to Land Acquisition Act. Additionally, public sector oil marketing companies (OMCs) edged higher as Brent oil extended losses into a fourth session, with prices hovering close to a more than five-year low above $57 per barrel, as persistent worries about a global supply glut offset concerns about output disruptions in Libya. Finally, the BSE Sensex gained 7.81 points or 0.03%, to 27403.54, while the CNX Nifty added 1.95 points or 0.02% to 8,248.25.