Markets to extend the rally mood on positive global cues

The Indian markets rallied in last session, surging by over a percent. Today, the start is likely to be in green with benchmarks extending the Santa rally before going to a long weekend. Traders will be getting some encouragement with Niti Aayog Vice Chairman Arvind Panagariya’s statement that the economy will grow over 8 percent this fiscal. Panagariya though stressed on the need to have an improved growth rate in sectors such as agriculture and services. However, there will be some cautiousness too, with Reserve Bank of India’s (RBI) Financial Stability Report (FSR), stating that stressed balance-sheets of large and medium sized firms have increased the risks to the banking sector during the half-year ended September 2015 due to deteriorating asset quality, lower soundness and sluggish profitability. Also, as the winter session of parliament ended without passage of GST, bankruptcy Bills. The Insolvency and Bankruptcy Code 2015 has been referred to a 30-member ‘Joint Committee of the Houses’. There will be some buzz in the telecom stocks on report that contribution of telecom sector revenue to gross domestic product (GDP) increased just marginally to 1.94 percent in 2014-15. Revenue generated by the telecom sector in 2014-15 increased to Rs 2,42,900 crore, accounting for 1.94 percent of total GDP, compared to previous fiscal's figure of Rs 2,19,553 crore or 1.93 percent of the GDP. 

The US markets surged in last session, extending the gains for the third day, supported by energy stocks as the oil rebounded. Traders also reacted positively to the report that new home sales increased for the second consecutive month in November. The Asian markets too have made a mostly positive start led by energy stocks.

Back home, a session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by vivaciously rallying over a percentage points on Wednesday, on the back of widespread gains in blue-chips. Sentiments remained up-beat on report that the current account deficit (CAD) narrowed to 1.6 percent of GDP at $ 8.2 billion in the second quarter ended September, compared to $10.9 billion or 2.2 per cent of GDP reported in the same period last year, mainly due to lower trade deficit. Appreciation in Indian rupee too aided sentiments. However, some gains were capped on the report that the Business sentiment in the country eased for the second consecutive month in December as weak demand weighed on companies. The MNI India Business Sentiment Indicator, a gauge of current sentiment among BSE-listed companies, fell slightly to 60.7 in December from 60.9 in November. Furthermore, industry body PHD Chamber said the process of initiating policy reforms has slowed down in the last few months, which will have a ‘long term’ impact on the economy.  The trading volumes were low in today’s session as traders turned cautious in a truncated week with stock exchanges closed on Friday on account of Christmas Day. Also, the Winter Session of Parliament ended today on a disappointing note with the Goods and Service Tax (GST) Constitutional Amendment Bill as well as the Bankruptcy Bill failing to clear vote. On the global front, Asian market ended mostly in green as investors’ cheered strong US data and a pause in the greenback's rally. European shares too made a strong start. Back home, the benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and traded with over half percent gains through the morning session of trade. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Finally, the BSE Sensex surged by 259.65 points or 1.01% to 25850.30, while the CNX Nifty gained 79.85 points or 1.03% to 7,865.95.