Markets to make a soft start on weak global cues

Indian markets went through heavy profit taking in the last session, with benchmarks witnessing cut of over a percent. Today, the start of the holiday truncated week is likely to be weak and the markets will be extending their decline tailing sluggish global cues, Nifty is likely to slip below 7750 levels in very early deals. Traders will also continue to react negatively to the mid-year economic analysis, which has forecast GDP growth of 7-7.5 per cent this fiscal, against 8.1-8.5 per cent growth projected in February this year. Also, a private report has stated that inflationary pressures are likely to see an uptrend largely due to the deficit monsoon and weakening of rupee, while WPI is expected to be in the range of (-)1.10 percent to (-) 0.90 percent in December. However, some recovery too can be expected, as after the truce in Parliament, the government is hopeful about a substantial portion of pending legislative business being completed in the remaining three days of the Winter Session, where 18 bills are pending. There will be some buzz in the infra stocks, as SEBI has said that in the case of initial public offerings, qualified institutional buyers can invest only up to 75 per cent in Infrastructure Investment Trusts (InvITs). Aviation stocks too will be in action on report that domestic airlines flew 73.22 lakh passengers in November this year recording a 24.65 per cent increase over the 58.74 lakh passengers carried during the same period in the previous year.

The US markets suffered sharp sell-off in last session mainly due to continuous decline in crude prices that weighed heavily on the energy stocks, also the global response to the Federal Reserve's interest hike, weighed down the market. The Asian markets have made mostly a weak start led by the slump in the Japanese market, as yen strengthened against dollar with crude extending its fourth session a drop.

Back home, Friday turned out to be a disappointing session for the Indian equity indices which got pounded by over a percentage point as investors sold stocks across sectors amid feeble global cues. After a negative opening, the domestic bourses never looked in recovery mood and breached their crucial support levels of 25,600 (Sensex) and 7,800 (Nifty). Traders overlooked the Finance Ministry’s statement that India is well prepared to deal with the impact of the US Federal Reserve interest rate hike and the end of uncertainties will actually help policy makers in emerging economies. Selling got accelerated with government lowering FY16 GDP growth forecast lower to 7-7.5% from 8-8.1% earlier. Also, the government at its mid-year economic review forecasted consumer price inflation of 6% for FY16 adding that the economy had made progress but challenges remained. It also promised to hold fiscal deficit at 3.9% of total GDP, while projecting a revenue deficit of 2.8% for FY16. It cautioned that it would reassess commitment to cut fiscal deficit by 0.4% by FY2017. It also warned that the proposed wage hike for central government employees by the Seventh Pay Commission could adversely impact the fiscal deficit. Weak opening in European counters too dampened sentiments, Asian markets too ended in red. Back home, selling was both brutal and wide-based as most sectoral indices on BSE ended in red. Counters which featured in the list of worst performers included software, technology and energy. Depreciation in Indian rupee too weighed down sentiments. Shares of IT companies finished weak after the US Congress doubled a special fee on the popular H-1B and L-1 visas raising it up to $4,500 to fund a 9/11 healthcare act and biometric tracking system that will hit Indian IT companies. Shares of oil exploration and production (E&P) companies also fell as global crude oil prices declined. Finally, the BSE Sensex plunged by 284.56 points or 1.10% to 25519.22, while the CNX Nifty declined by 82.40 points or 1.05% to 7761.95.