Markets to get a cautious but positive start

The Indian markets after a choppy trade managed a marginally positive close in last session, traders remained cautious on mixed batch of economic data and opted to remain on sidelines. Today, the start is again likely to remain cautious, though in green. Now with no major activities scheduled, traders will be eyeing the development in parliament. Traders will be reacting to RBI Governor Raghuram Rajan’s statement that the central bank is still accommodative in its monetary policy, but when things are normal, it will stay with the policy cycle under government’s inflation target. Also, the global ratings agency Moody’s Investors Service has said that an increase in public sector expenditure and an upturn in capital replacement cycle are driving investment in India, and it will take a while for private investment to show a sustainable revival. Traders will also be getting some support with DIPP’s report, stating that foreign direct investment (FDI) in the country grew by 13 percent to $16.63 billion during the April-September period of the current fiscal, compared to $14.69 billion during April-September 2014. The auto sector stocks will continue to react to their November sales numbers, as though the major companies maintained the tempo of festival season with an increase in sales in November over the year-ago period, but growth slowed from previous month.

The US markets coming out of the consolidation mood rallied on Tuesday, despite the Institute for Supply Management showing an unexpected contraction in US manufacturing activity. The Asian markets have made a mixed start, with some of the indices trading in red on speculation that the Federal Reserve will take a gradual approach to raising interest rates. 

Back home, Indian equity benchmarks managed to end the Tuesday’s session with marginal gains amid slew of economic data announcements. Markets kick-started the session with a decent gains and traded in narrow range as sentiment got a boost after India’s economy grew by 7.4% in the second quarter (July-September), outpacing China to become the fastest growing major economy. Some support also came in with Finance Minister Arun Jaitley’s statement that GDP in the current fiscal will be better than the growth rate recorded in the last financial year and improve further in subsequent years. Meanwhile, Reserve Bank of India (RBI) in its fifth Bi-monthly Monetary Policy review kept the key policy rate unchanged but affirmed the central bank's commitment to ease it as and when room is available, saying inflation is likely to perform better than expected. However, markets pared most of their initial gains after India’s manufacturing sector grew at its weakest pace in over two years in November as demand and output continued to soften. Nikkei’s Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, fell to a 25-month low of 50.3 in November from October’s 50.7. Some concern also came with report that the growth in eight core sectors -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity, which comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP), slowed to 3.2% in October 2015 compared to 9% in the corresponding month last year on the back of sharp decline in crude oil and steel production. On the global front, European counters made a sluggish start, while Asian markets rallied. Back home, traders took some encouragement with global rating agency Moody's Investors Service stating that the Reserve Bank of India’s efforts in bringing down inflation is credit positive for the country and hoped that the central bank will continue to remain vigilant in sticking to the target level. Appreciation in Indian rupee too aided sentiments. Finally, the BSE Sensex gained 23.74 points or 0.09% to 26169.41, while the CNX Nifty added 19.65 points or 0.25% to 7954.90.