Markets likely to start the New Year on a somber note

The Indian markets ended the year on a very optimistic note, gaining over half a percent despite volatility, traders went for short covering on the expiry day of the F&O series. Today, the start of the New Year is likely to be soft-to-cautious, while some of the Asian peers are still not trading the US markets weakness is likely to weigh on the sentiments. Traders will also be concerned with the Indian core sector growth contracting by 1.3% in November after expanding for six consecutive months, mainly dragged down by a sharp slowdown in electricity production and a contraction in cement and steel output. Also, there will be some concern with report that India’s external debt rose 1.7% to $483.2 billion at the end of September from the level in March due to long-term liabilities, especially commercial borrowings and non-resident Indian deposits. The oil & gas and power stocks will be in action after Qatar nearly halved the price of gas it sells under a 25-year contract and waived a payment liability of Rs 12,000 crore arising from India's refusal to import the committed number of shipments in 2015. The PSU oil marketing companies too may see some action, as the Petrol price has been cut by 63 paise per litre while diesel rate was lowered by Rs 1.06 a litre.

The US markets turned lower on the last day of the year and major indices ended down by around a percent. The trading activity was relatively light and the sentiments were impacted by a Labor Department report showing a bigger than expected increase in initial jobless claims in the week ended December 26th. The Asian markets have once again made a mixed start, with most of the indices closed for trade. Meanwhile, China’s first official indicator of the year signalled that manufacturing conditions recovered some lost ground in December.

Back home, The Indian equity markets snapped the calendar year 2015 on a solid note with an optimism of a great year ahead. Revival in corporate earnings, a stable monsoon after two successive drought years and progress on tax reforms can be key domestic triggers for the markets in 2016. Today, after training in tight range near neutral line for most part of the session, the key gauges managed to gain some momentum and ended the session with the gain of over half a percent. Sentiments got some support with the report that foreign portfolio investors (FPIs) bought shares worth a net Rs 152.20 crore on December 30, 2015. Besides, short-covering by speculators in view of December series expiry in the futures and options space also supported the upside. Markets also derived some encouragement with falling oil prices and ensuing mitigation of India’s current account deficit. However, gains remained capped with the head of the International Monetary Fund (IMF) Christine Lagarde’s statement 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. Furthermore, Finance minister Arun Jaitley said that subdued global economy and moderate private sector investment will continue to pose challenge in the next year. On the global front, Asian shares turned mixed on the final trading day of 2015, while many of them were not trading for the day. Back home, the markets got off to a positive start despite the mixed cues from the global peers. Investors remained cautious early in the day but sentiments improved as the day progressed. The bourse moved in a narrow range with a positive bias and touched their intraday lows in late morning trade. However, second half of the session saw the key gauges capitalize on the momentum and spurt to session’s highest levels in dying hour. 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 gained 157.51 points or 0.61% to 26117.54, while the CNX Nifty ended up by 50.10 points or 0.63% to 7,946.35.