Markets to start the final day of 2015 on a cautious note

The Indian markets witnessed some late hour sell-off and lost around half a percent in last session on weak cues from European as well as other Asian markets. Today, the final day of the calendar year and the F&O December series, markets are likely to see a flat start with not any major cues from the regional markets, while the US markets ending lower overnight. Volatility can be expected in the latter part of the trade as traders will roll over positions to the January series. There will be some cautiousness in the markets with the head of the International Monetary Fund (IMF) Christine Lagarde stating that global economic growth will be "disappointing" next year. She said the prospect of rising interest rates in the US and an economic slowdown in China were contributing to uncertainty and a higher risk of economic vulnerability worldwide. Meanwhile, Finance minister Arun Jaitley has said that Indian economy needs to grow by extra 1-1.5 percentage points to sustain wage hike and other benefits given to workers and the poor. There will be some buzz in the mining, cement and steel stocks, as weak response from bidders amid depressed commodity prices and market conditions has forced the government to call off the fourth round of coal block auctions meant for deregulated industries such as steel and cement. The telecom stocks will be in action, on report that India's mobile phone subscriber base peaked to more than 1 billion users for the first time.

The US markets ended lower in last session after a lackluster trade, traders remained concerned about the downbeat housing data and decline in crude prices, with all the major averages losing about a percent. The Asian markets have made a mixed start with some indices closed for trading and others moving in and out of the green, while the Hong Kong market was rising for the first time in the week.

Back home, Indian frontline equity indices were pounded a day ahead of December series futures and options expiry, leading the key indices to undo all the good work done in last trading session and slip below the important psychological 7,900 (Nifty) and 26,000 (Sensex) levels. Sentiments remained down-beat with a report indicating the recovery in Indian economic activity remains tentative and narrowly focused in sectors such as roads, railways, power transmission and passenger vehicles. Also, investors remained cautious with World Bank chief economist Kaushik Basu’s statement that the Indian economy is expected to grow at 7 to 7.5 per cent in 2016. Until October, the World Bank retained India’s growth forecast at 7.5 per cent for 2015-16 and expected it to be 7.8 per cent in 2016-17 and 7.9 per cent in 2017-18. Depreciation in Indian rupee also weighed on the sentiment. However, losses remained capped with report that foreign direct investment into India has grown by 35 per cent in the last 17 months even as across the world it has fallen by 16 per cent. FDI has come mainly into manufacturing, consumer goods, logistics and food processing sectors. On the global front, Asian shares ended mixed on Wednesday, while European shares made a lower start. Back home, the benchmark got off to an optimistic opening, shrugging the somber sentiments prevailing in Asian markets. However, the indices dropped into the red terrain, lacking any significant upside cues. Thereafter, the indices kept oscillating in a narrow range for most part of the day. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. This selling dragged key indices to intraday lows of around 25,940 and 7,890 levels post which some short covering helped the indices to settle off the day’s lows. Finally, the BSE Sensex declined 119.45 points or 0.46% to 25960.03, while the CNX Nifty ended down by 32.70 points or 0.41% to 7,896.25.