Markets to start the New Year on a cautious note

The Indian markets despite some choppiness managed to end the year 2014 on a positive note. Today, the start of the New Year is likely to be cautious on mixed set of economic indicators, on the one hand while the Central Government’s fiscal deficit for the April-November period touched 99 per cent of the Budget estimate for 2014-15, on the other, Core sector output grew at its fastest in five months in November, backed by the robust performance of coal, electricity and cement sectors. Core Sector grew by 6.7% from a year ago and faster than October’s 6.3%. Today, the Auto and consumer durable counters are likely to keep witnessing pressure as the government has decided to roll back the 4-6% excise duty cuts on automobiles announced last February. Consumer durable items like fridges and TV sets would also become costlier as the 2% excise duty here too will be rolled back. The PSU oil marketing companies too will see some action, as State-run oil marketing companies have decided against cutting petrol and diesel prices.  Instead, the companies would absorb the benefits of falling crude  oil prices to meet their inventory losses.

The US markets snapped the last session of the year with deep cuts, though they posted strong gains for the year. The day’s losses were triggered by a Labor Department report showing a bigger than expected rebound in initial jobless claims in the week ended December 27th. Most of the Asian markets are closed on account of Ney Year holiday.

Back home, Indian equity indices concluded the last trading session of calendar year 2014 in the green terrain and garnered massive gains of around thirty per cent on annual basis. After a cautious start, domestic gauges traded with strength throughout the session and ended near their intraday high levels. Sentiments got 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. Meanwhile, the Government, based on the recommendations of Foreign Investment Promotion Board (FIPB), has cleared eight Foreign Direct Investment (FDI) proposals worth about Rs 34.77 crore. The proposals include that of CSC Computer Sciences International Operations and Life Positive. Rally got extended after European counters made a positive start on Wednesday in a shortened trading session, while Asian markets ended mostly in the green. Back home, sentiments remained up-beat on report that foreign institutional investors were net buyers in Indian equities worth Rs 277.92 crore on Tuesday, as per provisional stock exchange data. Appreciation in Indian rupee too aided the sentiments. The partially convertible rupee was trading at 63.14 per dollar at the time of equity market closing against the Tuesday’s close of 63.38 on the Interbank Foreign Exchange. Meanwhile, power and infra stocks extended previous session’s gains witnessed after  Union Cabinet approved an ordinance to amend the contentious land acquisition act, which would relax some limitations including a 'consent clause' which so far has acted as obstacle for power, highways, housing, defence and infrastructure projects, thereby holding up the economy's growth potential. Finally, the BSE Sensex surged by 95.88 points or 0.35%, to 27499.42, while the CNX Nifty gained 34.45 points or 0.42% to 8,282.70.