Markets to make a soft-to-cautious start on sluggish global cues

The Indian markets suffered sharp sell-off in last session with profit taking appearing in all the sectors on global concern, the hardest hit were the metals pack tailing the global counterparts. Today, the start is likely to be cautious on sluggish global cues and lingering concerns over GST, but some recovery can be seen in the latter part of the trade. Meanwhile, Reserve Bank of India Governor Raghuram Rajan raising his optimism about the passage of long pending GST bill in the Parliament, has told American investors that continued focus on fiscal consolidation and inflation will mean they will reach their targeted goal. Finance Minister Arun Jaitley too pitching for early passage of the GST Bill in the Rajya Sabha, said efforts to create hurdle will amount to damaging the country. Traders will also be getting some support with the government stating that the fall in foreign portfolio investments may not have any major macroeconomic impact as long as capital flows are adequate to finance current account deficit. There will be some buzz in the steel stocks on report that to curb cheap steel imports from China, Japan and Korea, the government is likely to restrict inward shipments to one port, apart from introducing a floor price for imports.

The US markets despite recovering from their initial fall ended modestly in red in last session after maintaining a negative bias throughout the session, as commodities prices extended their recent decline. The Asian markets have made mostly a lower start, though some of the indices are showing recovery sign and the Chinese market has entered the green after the China’s central bank cut its reference rate to the lowest level since 2011.

Back home, extending their losing streak for fifth straight session, Indian equity benchmarks ended Tuesday’s trade with a cut of around a percent amid feeble global cues. Initially markets made soft start as investors failed to get any sense of relief 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. The agency said a ‘BBB-’ rating, the lowest in the investment grade, along with a stable outlook and a strong medium-term growth prospect and favourable external finances, will balance out with high government debt, weak structurals and a difficult, but improving, business environment. Domestic gauges extended their southward march and crashed like house of card in the last leg of trade as sentiment took a hit on sustained foreign fund outflows and confusion around the passage of the GST bill after prospects of a compromise between the government and the Opposition were cast in doubt, when a court ruled that Sonia Gandhi and Rahul Gandhi must appear in court in the National Herald case. Leaders of Congress party disrupted the parliament’s functions accusing the government of vendetta politics. Sluggish start in European counters too dampened sentiments, as oil held near the lowest since 2009, while Asian markets too ended in red. Back home, depreciation in Indian rupee too weighed down sentiments. Selling in metal counter too dampened sentiments on weak trade report from China. The world's second largest economy saw its trade numbers weaken in November, with exports falling for the fifth straight month and imports dropping for the 13th consecutive month, leading to a trade surplus of $54.10 billion for the month. The banking gauge too suffered sharp plunge and contributed majorly in dragging the markets lower. However, from the non sectoral gauges Tea stocks surged after it was reported that tea prices are likely to rise by Rs 15-20/kg from March 2016.  Finally, the BSE Sensex plunged by 219.78 points or 0.86% to 25310.33, while the CNX Nifty declined by 63.70 points or 0.82% to 7701.70.