Markets to make soft start on weak global cues

The Indian markets after a choppy trade managed to end slightly in green in last session. Today, the start of the session is likely to be weak and the markets will be extending their decline tailing sluggish global cues. Sentiments will also be dampened on report that foreign funds stayed away from Indian equities in 2015 and invested just Rs 17,806 crore ($3.2 billion) in stock markets last year as compared to Rs 1 lakh crore invested each into equities in the preceding three years. Traders will also be concerned with Former finance minister P Chidambaram stating the government has not been able to fulfill its promises. He also argued that since the GDP growth for 2015-16 is not likely to be higher than 7% to 7.3%, the economy is stuck in a groove. Shares of the three listed aviation companies will continue to be in action for second straight day after oil marketing companies slashed aviation turbine fuel prices by 10 per cent, the fourth consecutive monthly cut. Cement stocks too will be in action after average cement prices declined sharply by 7.3 per cent in December 2015 compared to the same month in the previous year mainly due to weak demand.

The US markets remained closed on the first trading day of the year, unable to give any cues to the other global markets. Asian equity indices have made a sluggish start with all the regional counters were trading in red in early deals. Meanwhile, China’s factory activity fell for a tenth straight month in December, underscoring persistent sluggishness in the world’s second-largest economy. The Caixin/Markit manufacturing purchasing managers, index (PMI) showed a reading of 48.2 in the final month of 2015, down from 48.6 in November.

Back home, the domestic benchmark equity indices managed to gather some impetus in final hours of the session to snap the first trading day of 2016 on an optimistic note, with moderate gains.  Earlier, Indian benchmarks started the day on subdued note due to lack of participation coupled with disappointing macro data that prompted some investors to book profits at lower levels. Sentiments remained bearish on the report that India's core sector contracted 1.3% in November after expanding for six consecutive months, dragged down by a sharp decline in steel production due to weak demand and imports. The fall in core sector output may curb industrial growth, which reached a five-year high of 9.8% in October.  Furthermore, India's fiscal deficit at the end of November was 87% of the target for the entire financial year, suggesting some struggle over the next four months but the government is still expected to stay within the budgeted figure without resorting to material spending cuts. The fiscal deficit for 2015-16 is budgeted at Rs 5.5 lakh core, or 3.9% of GDP.  However, bellwether indices pared their losses and entered into positive terrain in late afternoon session on the back of short-coverings and hopes that the Reserve Bank of India (RBI) will reduce key lending rates after Thursday's disappointing macro data points. On the BSE sectoral space, Realty counter remained the top gainer in the space with around two percent gains followed by the high beta-Capital Goods index which ended with gains of over a percent. On the flipside, the IT and Teck sectors languished at the bottom of the table with losses of 0.34% and 0.30% respectively, being the only laggards in the space.  Meanwhile, shares that attracted investors in a quiet market, were from aviation sector, such as Jet Airways, , SpiceJet and InterGlobe Aviation after oil marketing companies reduced aviation turbine fuel (ATF) prices by 10%. Good buying was also witnessed in Telecom stocks like Bharti Airtel, RCom and MTNL on the report that Mobile phone user base crossed 1 billion-mark in October this year to reach 1.03 billion connections, a rise of 0.7% from September. On the other hand, metal stocks witnessed some beating as an official survey showed activity in China's manufacturing sector contracted for a fifth straight month in December. Finally, the BSE Sensex gained 43.36 points or 0.17% to 26160.90, while the CNX Nifty ended up by 16.85 points or 0.21% to 7,963.20.