Markets to make some recovery with a positive start

The Indian markets lost their way completely in the second half of the trade and ended with cut of over half a percent in last session, lacking any supportive cues. Today, the start is likely to be in green tailing positive global cues and some lower level buying may take the Nifty above 7800 mark in very early trade. Traders will be getting some encouragement with the report hat current account deficit (CAD) narrowed to 1.6 percent of GDP at $ 8.2 billion in the second quarter ended September, mainly due to lower trade deficit. However, RBI in the second quarterly balance of payments data release has said that after a sharp pick up in the first quarter, net foreign direct investment (FDI) moderated in second quarter of 2015-16. There will be some buzz in export oriented stocks, as the Commerce Ministry in a statement has said that there is no crisis in India on the export front and while there is a need for caution, there is no need for alarm. However, there will be some cautiousness too in the markets, as a survey has said that business sentiment in the country eased for the second consecutive month in December as weak demand weighed on companies.

The US markets extended gains in last session on report that the US economy expanded at a revised 2 percent annualized rate in the third quarter and also reflected optimism about the possibility of further Chinese stimulus following statements from government officials. The Asian markets have made mostly a positive start amid growing investor confidence in the US and China. An increase by the price of crude oil also generated some buying interest.

Back home, a session after showcasing a vivacious rally and amassing close to a percent of gains, Indian equity indices faltered failing to extend the winning momentum on Tuesday, as investors avoided building large positions in a holiday-shortened week and ahead of the expiry of derivatives contracts next Thursday. Sentiments remained down-beat with the reprot that the Finance Ministry has cut its ambitious disinvestment revenue target by 57% to Rs 30,000 crore for the current fiscal year. Despite missing targets in the past five years, the Centre had set an ambitious disinvestment revenue target of Rs 69,500 crore for FY16. But, strategic stake sales failed to take off and minority stake sales in PSUs also came to a halt after initial promise due to volatile markets. Besides, parliamentary turmoil and the upcoming US GDP (gross domestic product) figures, also weighed on the sentiment. However, investors got some comfort with Harvard researchers report that India, with a projected annual growth rate of 7 per cent, has the potential to be the world's fastest growing economy over the coming decade, surging ahead of its South Asian economic rival China that will continue to see a slowdown. Furthermore, the rupee appreciated by another 4 paise to 66.31 against the US dollar extending its winning streak for the sixth day on continued selling of the American currency by banks and exporters. On the global front, Asian equity markets ended mostly in green on Tuesday, however, European stocks reversed gains to trade lower. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, a session after the awe-inspiring close to a percent rally. Thereafter, the key indices failed to show any eagerness to regain those levels, as they oscillated around the neutral line for most part of morning trades due to lack of any encouragement. The key gauges made some attempts to claw back into the green zone in early afternoon trades but profit booking at higher levels dragged the key indices to the lowest point. Finally, the BSE Sensex declined by 145.25 points or 0.56% to 25590.65, while the CNX Nifty lost 48.35  points or 0.62% to 7,786.10.