Markets to make a soft start tailing weak global cues

The Indian markets posted good gains in last session despite a choppy trade. Today, the start is likely to be soft tailing the weak global cues. Also, the RBI has reported that direct investments by Indian firms abroad fell 21 percent to $2.28 billion in October 2015 compared to the same month last year that may weigh on the sentiments. However, traders may get some support with Finance Minister Arun Jaitley's statement that notwithstanding “adverse global circumstances” and headwinds, Indian economy is still managing to keep ahead. FM has also invited sovereign wealth funds of the UAE to invest in National Infrastructure and Investment Fund (NIIF), saying it will provide good return. There will be buzz in the markets with the report that the 7th Pay Commission is likely to recommend an average 15 percent hike in salary which is due for implementation from January 1, 2016. Metals and mining stocks will remain under pressure with the Supreme Court seeking response from the state and several mining companies on petitions challenging the renewal of 89 mining leases by Goa government. The aviation stocks too will be in action after the Competition Commission slapped penalties totalling Rs 258 crore on Jet Airways, IndiGo and SpiceJet for cartelisation in fixing fuel surcharge for transporting cargo.

The US markets made a flat closing after a choppy trade in last session. Traders expressed uncertainty about the outlook for the markets following the terrorist attacks in Paris and preferred to remain on sidelines, digesting a report showing an uptick in consumer prices in October. The Asian markets have made a mixed start, while the Japanese markets gained for a second day as the yen declined; the Chinese market was in red on concern of resumption of initial public offerings.

Back home, Tuesday’s session turned out to be a fabulous day of trade for the Indian equity markets, where bulls maintained momentum for second consecutive session, garnering a gain of around half a percent. Hectic buying activity which took place during second half of trade mainly drove the markets higher, with frontline gauges ending near their crucial 25,900 (Sensex) and 7,850 (Nifty) mark. After a gap-up opening, marketmen booked all their initial gains at higher levels amid report that India’s merchandise exports dipped for the 11th month in a row and stood at $21.35 billion, down by 17.33 percent, due to weak global demands. However, the data showed trade deficit narrowed to $9.8 billion in October compared with $10.5 billion in the previous month. Sentiments took U-turn in second half of trade, as market-participants opted to take positions in beaten down but fundamentally strong stocks. Traders got some encouragement with Finance Minister Arun Jaitley’s statement that the government would make all efforts to persuade the opposition for the passage of Constitution amendment bill for implementation of GST in the winter session. The Goods and Services Tax (GST), which will subsume more than a dozen state levies to create a single market, is to be implemented from April 1, 2016. Firm opening in European counter too aided sentiments, while all the Asian markets, barring Shanghai Composite, ended higher. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. On the sectoral front, stocks related to Oil and Gas counter kept buzzing after the government issued a new draft hydrocarbon policy under which blocks will be awarded on the basis of a simpler revenue-sharing model versus the earlier profit-sharing model. Shares of tea companies remained in limelight on expectation that tea prices will surge amid likely drop in production. Sugar stocks too remained on buyers’ radar after some reports stated that the government is planning to offer a subsidy of Rs 1,200 crore to farmers. Finally, the BSE Sensex surged by 104.37 points or 0.41% to 25864.47, while the CNX Nifty gained 30.95 points or 0.40% to 7837.55.