Markets to make a flat-to-cautious start after the big rally

The Indian markets posted remarkable rally in last session with benchmarks gaining around a percent. Today, the start is likely to be flat-to-cautious and markets may consolidate after the big rally. Meanwhile, former RBI Governor C Rangarajan has said that the proposed 1 percent additional tax on inter-state sales is against the spirit of Goods and Services Tax (GST) and that should not be implemented. Industry body Assocham has said that GST is critical for India to revive economy. However, as the disappointing winter session of Parliament will be concluding on Wednesday, the government hopes that the Congress and other Opposition parties would stand by their “promise” and help in passing of the pending Bills as there is no possibility of extension of Parliament “as of now’’. The telecom sector is likely to be in action with the Telecom Regulatory Authority of India (TRAI) saying that it will come up with its recommendations on spectrum pricing for the next round of auction by mid-January. TRAI has floated a consultation paper on reference made by the government to suggest the base or floor price for all available airwaves for mobile services.

The US markets bounced back with some lower level buying in last session; partly offsetting the steep losses posted in the two previous sessions. Though, a lack of major US economic data kept some traders on the sidelines. The Asian markets have made mostly a positive start on the prospect of more stimulus from China, though the Japanese market was trading marginally in red on strength in yen.

Back home, a session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by vivaciously rallying about a percentage point on the first day of Christmas week, thanks to the hefty short covering in the beaten down Metal and Banking counters. Sentiments remained buoyant on hopes of government getting three critical bills passed through the parliament including bankruptcy code, legislations on setting up of commercial courts and amendments to the Arbitration and Conciliation Act. Some support also came with the government plans to award Rs 28,000 crore worth of highways development projects in the current fiscal under the newly conceived hybrid annuity model amid renewed interest among private firms. This will be the largest chunk of investment under public private partnership or PPP in the sector in any single year since 2010. Besides, Appreciation in Indian rupee too aided sentiments. Rising for the fifth straight session, the rupee gained 9 paise at 66.31 against the dollar in early trade on increased selling of the US currency by exporters. On the global front, Asian markets ended mostly in green on Monday as Chinese shares climbed to the highest level in almost four weeks, European shares too edged higher in early trade. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, with investors remaining worried on uncertainty over the GST Bill following the standoff between the government and the Congress. But the frontline indices slowly but steadily started gathering steam and surged by over half a percent by late morning trades. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based buying in undervalued stocks. The northbound journey only concluded with the close of the session helping the key gauges in recovering the ground lost in last trading session. Finally, the BSE Sensex surged by 216.68 points or 0.85% to 25735.90, while the CNX Nifty gained 72.50 points or 0.93% to 7,834.45.