Markets to make a soft start tailing weak global cues

The Indian markets after losing their early momentum ended in red in last session, while there were no major cues to support the markets, traders remained concerned about the global growth. Today, the start is likely to be soft tailing the weakness in the global markets with Nifty breaching the 7750 level in the very start and may even retesting 7700 mark. However, markets may get some support with ratings agency Fitch, while maintaining a stable outlook for India, stating that the country’s economy will grow by 7.5 percent in the current fiscal that will stand out globally, but warned that its business environment would remain weak despite improvements. The agency has also said that India’s sovereign ratings continued to be constrained by the limited fiscal space of the government. Meanwhile, NITI Aayog Vice Chairman Arvind Panagariya, amid the government's resolve to push GST bill in Parliament this week, has said he is hopeful about its passage and India is moving in the right direction on big ticket reforms. The commodities stocks are likely to remain under pressure tracking the global counter parts, however the sharp drop in global crude prices are likely to give some cheers to the PSU oil marketing companies. Also, the government has said that the petroleum products should come under the ambit of the proposed Goods and Services Tax (GST) but a final decision would be taken when the state governments come on board on it.

The US markets slumped in last session led by decline in commodities stock and the major averages offsetted gains posted last week. Selling pressure was also generated by concerns about the outlook for monetary policy ahead of next week's Federal Reserve meeting. The Asian markets too have made a soft start and some of the indices are down by over a percent, as energy-related shares slid with currencies of commodity-producing nations.

Back home, extending their southward journey for fourth day in a row, Indian equity benchmarks ended the Monday’s trade with a cut of around one third of a percent. After a positive start, domestic bourses lost momentum in absence of any positive trigger and entered into the red terrain as traders remained concerned ahead of the US Federal Reserve's meeting next week, where it is widely expected to raise rates for the first time in about a decade. Sentiments also remained dampened on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 1,745.73 crore on December 04, 2015. However, losses remained capped as some encouragement came with the committee headed by Arvind Subramanian on goods and services tax (GST) rates coming up with an amicable solution to the ongoing confrontation of the government and the Opposition, suggesting 17-18 percent GST rate and dropping of the one per cent additional tax on inter-state sales. Industry bodies FICCI and Assocham too 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. Positive opening in European markets too provided some support, while Asian markets too ended mostly in green. Back home, some support also came in with Fitch Ratings affirming India's Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'BBB-', while the Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at 'BBB-' and the Short-Term Foreign-Currency IDR at 'F3'. On the sectoral front, FMCG remained the top loser with ITC contributing the most to the decline after Arvind Subramanian-led GST panel suggested that tobacco products including cigarettes will see a 40% tax. The taxation is over 25% value added tax (VAT) already charged on current products. On the flip side, shares of logistics companies remained on buyers’ radar as they would directly benefit if the GST bill gets passed in the Parliament. Finally, the BSE Sensex declined by 108.00 points or 0.42% to 25530.11, while the CNX Nifty lost 16.50 points or 0.21% to 7765.40.