Markets to make a flat-to-cautious start ahead of IIP data

The Indian markets made a smart bounce back in last session after declining for six straight sessions. Today, the start is likely to be flat-to-cautious on mixed global cues, and traders will be eyeing the Index of industrial production data for the month of October, slated to be announced after the market hours. Indian industrial output growth slowed to its weakest rate in four months in September. Though, traders are likely to get some support with a UN report stating that India's economy is projected to grow by 7.3 percent next year and will continue to be the fastest growing economy in the world in 2016 and 2017, amid a volatile global financial condition. Also, the RBI governor Raghuram Rajan has said that the implementation of the much-talked-about Goods and Services Tax (GST) will be good for the economy. He added that there are two major advantages that GST will bring. Firstly GST could increase the tax base because it will bring more people under the tax net. Secondly, GST will re duce the barriers between states. It will make the country a common market place. The banking stocks may remain under pressure, as the rating agency Fitch has said that credit growth of banking sector may moderate further in the current financial year as worsening asset quality coupled with capital constraints were acting as impediments. However, it has said that said private banks are in a better position to take advantage of the economic recovery.

The US markets made a positive but flat closing in last session, as crude after a day of stabilization dropped once again. It was mainly bargain hunting that contributed to the higher close on Wall Street. The Asian markets have made mostly a lower start with some indices suffering cut of over half a percent, while the Japanese market has bounced back, as the yen weakened against dollar before next week’s Federal Reserve meeting.

Back home, after six straight sessions of feeble performances, Indian benchmark equity indices finally showed some enthusiasm as market bulls eagerly waited for some significant upside triggers to cover the huge pile of short positions that got build up in the recent past. The frontline indices registered a gain of around a percent, recapturing their crucial 25,200 (Sensex) and 7,650 (Nifty) bastions amid tentative improvement in risk appetite of investors who resorted to hefty bottom fishing after the recent brutal risk aversion. Sentiments remained sanguine with report that indirect tax collection jumped 34.3 percent to Rs 4,38,291 crore during the first eight months of current financial year. Investors overlooked report that foreign investors continue to sell Indian shares ahead of the US Federal Reserve’s December 16 meeting, where it is widely expected to raise interest rates. Foreign investors have sold Rs. 4,651 crore ($696.49 million) worth of Indian stocks already in December, on track to surpass the Rs 7,074 crore ($1.06 billion) sold in November. Meanwhile, the uncertainty over the crucial GST Bill has loomed back as the hopes of tax reform being passed in the current session of Parliament has faded. Buying accelerated in last leg of trade as European counters turned green, however, Asian equity indices ended mostly in red. Back home, appreciation in Indian rupee too supported the sentiments. Rally in real estate stocks too aided sentiments after the Union Cabinet approved the Real Estate (Regulation and Development) Bill, 2015. The Real Estate Bill provides uniform regulatory environment to ensure speedy adjudication of disputes and orderly growth of the real estate sector. Stocks related to the shipping counter too remained on buyers’ radar, as the Union Cabinet has cleared a Rs 4,000-crore package to spur India’s ship building industry, combined with a slew of incentives which include the right of first refusal on all government purchases for Indian shipyards, tax incentives and the ‘infrastructure’ status for shipbuilding and ship repair industry. Finally, the BSE Sensex surged by 216.27 points or 0.86% to 25252.32, while the CNX Nifty soared by 70.80 points or 0.93% to 7683.30.