Markets to make a positive start in sync with other global markets

The Indian markets extending their gains for the third day ended higher by over half a percent in last session. Today, the start is likely to be in green in sync with the gains in the other global markets, after the US Federal Reserve raised interest rates for the first time in almost a decade and Fed Chair Janet Yellen emphasizing that further tightening would be slow. Traders will also be getting some support with Finance Minister Arun Jaitley hinting at accepting Congress stand on scrapping of one per cent additional tax, and that Good and Services Tax rate could be much less than 18 per cent recommended by Arvind Subramanian panel. Meanwhile, pitching for an early take-off of the Goods and Services Tax, IMF managing director Christine Lagarde said it will help India create more jobs, increase revenue as well as promote domestic manufacturing. There will be some buzz in the coal, metals and mining stocks, as the government has approved allotment of coal blocks to public sector entities for commercial mining, taking the industry a step closer to complete deregulation and allowing private entry. Some somberness can be seen on the PSU oil marketing companies with the government raising excise duty on petrol by Rs 0.30 a litre and on diesel by a steep by Rs 1.17 a litre.

The US markets rallied in last session after Fed announced a quarter percent interest rate hike on conclusion of its two days meeting, with major averages extending the upward move seen over the two previous sessions. The Fed said monetary policy remains accommodative even after the rate hike, which marked the first rate increase since 2006. The Asian markets have got an all green start, led by the Japanese market which is up by over 2 percent in early deals on yen weakness against dollar.

Back home, extending their winning streak for third day in a row, Indian equity benchmarks ended the session with a gain of over half a percent on Wednesday. Sentiments remained up-beat with Finance Minister Arun Jaitley’s statement that the government is willing to scrap the proposed 1% additional tax levy under the goods and services tax (GST) regime, but ruled out putting the new tax rate under GST in the Constitution amendment bill itself or setting up a dispute resolution panel. He also said it is almost certain that the final tax rate in GST will be below 18%. Some support also came in with Arun Jaitley’s statement that the government will achieve its fiscal deficit target without any cuts in the government spending. Traders overlooked India’s weak merchandise exports data, which shrank for a 12th straight month in November, falling an annual 24.43 percent. Indian exports during November, 2015 were valued at $ 20014.22 million in Dollar terms, over 24 percent lower than the level of $26485.71 million during November. Global cues remained supportive with European counters making a firm start, Asian markets too rallied, led by over two and a half percent gains in Japanese market. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Appreciation in Indian rupee too supported the sentiments. Buying in Oil shares too aided sentiments following slight rebound in global crude oil prices. Shares of PSU oil marketing companies too remained in limelight on account of lower-than-expected cut in petrol and diesel prices. Petrol and diesel prices on Tuesday were cut by 50 paise and 46 paise a litre, respectively, though the government has raised excise duty on petrol and diesel taking advantage of the fall in global crude prices. Also, sugar stocks edged higher for second straight session after a bill was passed by the Lok Sabha to hike the sugar cess ceiling from Rs 25 to Rs 200 per quintal. Finally, the BSE Sensex surged by 173.93 points or 0.69% to 25494.37, while the CNX Nifty gained 50.00 points or 0.65% to 7750.90.