Weak start on cards on dismal global cues

11 Jan 2016 Evaluate

The Indian markets despite a choppy trade managed a positive close in last session, coming out of four straight sessions of fall, tracking a mostly positive trend in Asia and Europe. Today, the start is likely to be soft, on weak global cues, as the markets heads into the upcoming earnings season. Traders will be concerned with a private report stating that consumer sentiments in India fell for the fourth consecutive month in December to the lowest on record, as consumers reported a further deterioration in their personal finances amid rising inflation. Also, as the Commerce and Industry Minister Nirmala Sitharaman has said the devaluation of the Chinese currency is a "worrying" development which will make Indian exports expensive and widen the trade deficit with the neighbouring nation. However, there will be some solace with a World Bank report stating that India will continue to be the bright spot of the global economy and is projected to grow at a robust 7.8 percent in fiscal 2016-17, more than a percentage point higher than China’s. Metals and mining stocks will be buzzing as India is getting ready to open up commercial coal mining to private companies and Coal Secretary Anil Swarup has stated that the government has identified mines it plans to auction, and is now finalising other terms such as eligibility criteria for companies to take part and whether and how to set up revenue sharing.

The US markets made another week close in last session with stocks failing to sustain an initial upward move after the bargain hunting subsided. All the major averages lost over 6 percent in the very first week of the year. The Asian markets have made mostly a weak start following the negative cues from Wall Street on Friday and weak commodity prices amid continued worries about the Chinese economy.

Back home, session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by rallying around half a percent on the last day of the week, thanks to the hefty short covering in the beaten down Realty and high beta Power counters. Eventually, the NSE’s 50-share broadly followed index - Nifty garnered over three tens of a percent to settle above the crucial 7,600 levels while Bombay Stock Exchange’s Sensitive Index - Sensex smashed over eighty points and closed above the psychological 24,900 mark. Sentiments remained up-beat with Finance Minister Arun Jaitley’s statement that Indian economy has emerged as one of the fastest growing economies in the world indicating that the economy is firmly on the path of economic revival. The recovery rally in the Indian equity markets was also supported by value buying, as a sizeable number of stocks were trading at their yearly lows after four consecutive sessions of slide. Furthermore, the central government's effort to reach out to the opposition to break the impasse on the Goods and Services Tax (GST) Bill restored investors' confidence. Some support also came with the report that the World Bank expects India's growth to pick up to 7.8% in the next financial year, projecting it to be the fastest growing economy in the world for the next three years by a distance, riding on stronger domestic policy reforms. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1051.74 crore on January 07, 2016. Besides, caution prevailed over the upcoming domestic macro-data on industrial output, retail inflation and the third-quarter earnings results which start coming in from January 12, 2015. Earlier on Dalal Street, the benchmark got off to a positive start as the indices rebounded after the recent sell-offs following the strong bounce back on Asian markets after China suspended its market circuit breaker and set a firmer midpoint rate for trading of the yuan for the first time in nine days. The frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices start losing steam thereafter and even drifted to the lowest point in the session in early afternoon trades. However, hefty short covering in the late hours helped the indices to bounce to higher levels. Finally, the BSE Sensex gained 82.50 points or 0.33% to 24934.33, while the CNX Nifty ended up by 33.05 points or 0.44% to 7,601.35.

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