Markets to make a cautious start after a long weekend

The Indian markets suffered sharp setback in last session with major averages breaching the important psychological levels. Today, the start is likely to remain cautious. Traders will be a bit concerned with the Congress hardening its position ahead of the winter session of Parliament on the Goods and Services Tax (GST) Bill, saying it is opposed to the four-slab tax structure in which the top limit is 28 per cent. Meanwhile, the CBEC Chairman Najib Shah has said that the Centre will share the draft model GST law with the states as it prepares for the rollout of Goods and Services Tax (GST) from April 1 next year. Traders will be getting some respite with India’s industrial production growing by 0.7 percent in September after contracting for two consecutive months in July and August, though the manufacturing and mining sectors along with capital goods output registered decline. All eyes will be on the twing inflation data of CPI and WPI to be released later in the day. The Tata group stocks will once again be in action with the independent directors of Tata Motors gave board Chairman Cyrus Mistry a tacit nod, but stopped short of an outright endorsement. The aviations stocks will continue to remain under pressure with the government deciding to levy up to Rs 8,500 per flight on major routes to fund the regional air connectivity scheme. There will be lots of scrip specific actions based on the result announcements made during past couple of days and today.  

The US markets made a mixed closing after showing a lackluster trade in last session, as traders seemed reluctant to make more significant moves after the strong gains seen in reaction to President-elect Donald Trump's surprise victory. The Asian markets too have made a mixed start and some of the indices are marginally in red despite rise in crude.

Back home, Friday’s session turned out to be a dreadful session for the Indian benchmark indices, which disintegrated like a ‘house of cards’ and went on to breach various key technical levels in the over two and half percent freefall as investors feared higher interest rates under President Donald Trump will spark capital outflows from emerging markets like India. Also, impacting sentiment was the demonetisation of Rs 500 and Rs 1000 notes that dampened sentiment across sectors, especially, real estate, fast moving consumer goods and consumer discretionary. The frontline indices which appeared to be on a southbound journey, desperately kept searching for a bottom through the session, but to no avail as the journey only halted with the session’s close. Fall in rupee also dented the market mood on Friday as the currency crashed by 52 paise on account of strong demand of dollar. Emerging market currencies like rupee were hammered by concerns that investors could pull back their funds out of higher-yielding emerging assets and move them back to the US. On the domestic front, around 3 percent drop in index heavyweight State Bank of India (SBI) too dampened the sentiments. The country’s largest public sector lender came under pressure on reporting nearly 35% drop in bottomline for the quarter ended September 30, 2016, thanks to an 80% year-on-year rise in provisions and contingencies. Investors failed to get any sense of relief with the report that Reserve Bank of India (RBI) in a step to address corporate stress, making sweeping changes to existing loan recast schemes, it has given lenders additional time up to 180 days for hammering out a restructuring package under the scheme for sustainable structuring of stressed asset (S4A). Previously, the time limit was 90 days. Further, the International Monetary Fund (IMF) said it supports India's efforts to fight corruption through demonetisation, but noted that the transition needs to be managed 'prudently' to minimise any disruption.  Meanwhile, Airlines stocks came under pressure on the report that the government would impose a new levy on some domestic flights. The ministry of civil aviation has proposed the levy to help raise money to fund air travel between India's smaller towns and cities at a subsidised cost. Finally, the BSE Sensex declined 698.86 points or 2.54% to 26818.82, while the CNX Nifty dropped 229.45 points or 2.69% to 8,296.30.