Markets to get a positive but cautious start

The Indian markets went through sharp selling in last session and the benchmarks lost their crucial psychological levels. Today, the start of the new week is likely to be positive but cautious, though there will be some support with report of Chief Economic Advisor (CEA) Arvind Subramanian-led panel recommending standard GST rate of 18 percent and lower rate of 12 percent on specified goods. Industry bodies FICCI and Assocham have welcomed the recommendations put forth by the Arvind Subramanian panel and said rollout of the tax reform will add 2 percent to India's growth and usher in efficiency and transparency in the indirect tax regime. Still there will be apprehension about the passage of the GST bill in the current session of the parliament, as the Centre plans to roll out the GST from April next year. Cautiousness is likely to prevail in the markets with the better-than-expected US employment data for November, paving the way for a rise in the interest rate mid-December. There will be some buzz in the infra stocks, as Road Minister Nitin Gadkari has said there was scope for developers to provide some equity in projects to farmers whose land has been acquired to build roads on build-operate-transfer (BOT) basis. He has said that Landowners could be partially given some upfront compensation as well as some annuity form of income over the years.

The US markets moved higher in last session on getting a better than expected jobs report, also the Labor Department said the unemployment rate held at the more than seven-year low of 5.0 percent set in the previous month. The Asian markets have made mostly a positive start led by the Japanese market which has moved higher by over a percent in early deals, with strong US jobs data reinforcing confidence in the world’s largest economy.

Back home, Friday turned out to be a disappointing session for the Indian equity indices which got pounded by around a percentage point tracking a global sell-off after the European Central Bank’s (ECB) stimulus package fell well short of markets’ high expectations. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 25,700 (Sensex) and 7,800 (Nifty). Selling was both brutal and wide-based as none of sectoral indices, barring Metal, on BSE were spared. Counters, which featured in the list of worst performers, include utilities, power and finance. Sentiments also remained downbeat with Janet Yellen’s hawkish stance on the US economy thus reinforcing the case for an interest rate hike in December 2015. The rating agency, Crisil in its latest report has said that India is unlikely to attain the ambitious target of doubling exports of goods and services to $900 billion by fiscal 2020 from $470 billion in FY15, mainly due to declining competitiveness of India Inc, infrastructure bottlenecks and labour market rigidity. Investors failed to draw any sense of relief with Standard & Poor's Ratings Services projecting India's economy growing at 7.4 percent in the current fiscal, which will further improve to over 8 percent in 2016-17. Selling got intensified after European markets made an awful start, while Asian markets too ended in red terrain. Back home, traders did not pay any heed to Finance Minister Arun Jaitley’s statement that the government will meet fiscal deficit target and maintain quality. Depreciation in Indian rupee too dampened the sentiments. However, stocks related to logistic showed some strength on report that the government and Opposition were finding some common ground on crucial elements of the much-awaited goods & services tax (GST). Finally, the BSE Sensex plunged by 248.51 points or 0.96% to 25638.11, while the CNX Nifty declined by 82.25 points or 1.05% to 7781.90.