Markets to see some recovery after four days of pounding

08 Jan 2016 Evaluate

The Indian markets embroiled in global rout slumped in last session with major averages closing at their three weeks low, Sensex even slipped below the 25000 crucial mark. Markets after a gap-down opening kept plummeting lower throughout the day with most of the bluechip companies witnessing pounding. Today, the start is likely to be cautious but recovery can be expected along with other global peers. On domestic front the government has said that it agreed to accept demands set by the Congress party to back a landmark tax reform, raising hopes a political standoff that blocked the measure throughout last year might be resolved. Also, as the Finance Minister Arun Jaitley during his fourth Pre-Budget Consultative Meeting with the representatives of IT (Hardware & Software) Sector said that Indian economy has emerged as one of the fastest growing economies in the world with its GDP growth accelerated at 7.3 percent in 2014-15 compared to 6.9 per cent growth in 2013-14 and 5.1 per cent in 2012-13, indicating that the economy is firmly on the path of economic revival. Meanwhile, in a pre-Budget meeting with the commerce and industry ministry, India Inc has said that the government should further ease Foreign Direct Investment (FDI) norms, especially in sectors such as multi-brand retail, education and e-commerce, where its stance has been ambivalent till now. Some buzz can be seen in the PSU stocks, as the finance ministry has asked Central Public Sector Enterprises (CPSEs) to shell out 30% dividend to the government, and that CPSEs with large cash reserves and sustainable profit may issue bonus shares.

The US markets ended sharply lower in last session on growing Chinese fear and oil prices dropping to 12-year lows. Investors also braced for Friday's US government jobs report and remained on sideways. Some of the Asian markets have extended losses at their weakest level since September as the crude oil lingered around a 12-year low, though many are showing signs of recovery, as the Chinese markets bounced back in early trade.

Back home, it turned to be yet another tumultuous day of trade for the Indian stock markets which got thrashed for the fourth straight session to end with a cut of over two percent. Markets saw relentless selling pressure across the counters after further depreciation of the Chinese yuan rekindled fears of a growth slowdown in the world's second largest economy while slump in crude oil prices also dampened sentiment. The global benchmark Brent fell over 3 per cent to $33 per barrel, a level not seen since April 2004 and below the previous 11-year low. Finally the NSE’s 50-share broadly followed index Nifty, suffered a nasty one hundred and seven point laceration to settle below the crucial 7,600 support level while Bombay Stock Exchange’s Sensitive Index Sensex got obliterated by over five hundred points and closed just above the psychological 24,850 mark. Moreover, the broader markets too failed to show any kind of fervor and settled with large cuts of about three percent. Sentiments remained down-beat with the World Bank lowered its global economic growth forecast for 2016 to 2.9% against its June forecast of 3.3% growth because of sluggish performance from major emerging market economies. On the domestic front, sentiments got undermined with the report that Indian companies raised the lowest amount via both onshore and offshore debt markets in six years last year owing to subdued domestic investment climate and volatile global markets. Earlier on Dalal Street, the benchmark got off to a somber opening, extending the downtrend for the fourth straight session as pessimistic sentiments prevailed across Asian markets. Thereafter, the frontline indices lost the plot and kept tumbling down the hill without any stoppage. The steep fall turned even acute after the weak opening of European markets in the noon trades. The indices barely managed to show signs of stabilizing in the session as the downward drift halted only with the session’s close after suffering gargantuan losses. Finally, the BSE Sensex declined by 554.50 points or 2.18% to 24851.83, while the CNX Nifty lost 172.70 points or 2.23% to 7,568.30.

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