Markets to see some recovery on optimistic global cues

The Indian markets suffered sharp slump in last session with major averages further plunging on FII selling. Today, the start is likely to be in green and some recovery can be seen tailing positive global cues and some good domestic economic data. Retail inflation on the back of easing food and fuel prices eased to 14-month low of 4.20 percent in October this year, strengthening the case for RBI rate cut next month. On the same time, exports continued to grow for the second month in a row, expanding by 9.59 percent to $ 23.51 billion in October on healthy growth in shipments of jewellery and engineering products. Though, imports too increased by 8.11 percent to $ 33.67 billion, leaving a trade deficit of $ 10.16 billion in the month under review. Banking stocks will be in focus, as the Reserve Bank of India (RBI) has decided to stick to its deadline of March 2017 to clean up balance sheets of ban. There will be some buzz in the oil marketing companies, as the prices of petrol and diesel has been cut by Rs 1.46 and Rs 1.53 a litre respectively. Tata group shares too will be buzzing with the Tata Global Beverages sacking Cyrus Mistry as chairman of the company.

The US markets ended higher in last session following report from Commerce Department, showing that retail sales increased by more than expected in the month of October. Also a spike in crude prices supported the markets upmove. The Asian markets have made mostly a positive start led by the Japanese market, which is up by over a percent in early deals after the dollar fell from a five-month high versus the yen as investors questioned whether financial markets overreacted to Donald Trump’s shock U.S. election victory.

Back home, the carnage in Indian stock markets prolonged for yet another session as the benchmarks continued to correct further for the second-straight session on Tuesday amid rupee plunging by over 115 paise in last three trading days. Indian rupee extended fall for the third consecutive session to hit over four-and-a-half-month low on Tuesday as the American currency strengthened overseas. A weak rupee does not auger well for foreign inflows, as any depreciation in local currency eats into profits of foreign investors when they redeem their investments. FPIs have already sold Rs 3,175 crore worth of domestic stocks this month following a Rs 4,306 crore worth of selloff in the previous month. Furthermore, muted second quarterly earnings posted by some more bluechip companies as well as poor growth in factory output, also accelerated selling activity in the local markets. The industrial production (IIP) data was announced after market hours on November 11, showed that Industrial production grew a meagre 0.7% in September mainly due to poor show by manufacturing and mining sectors coupled with decline in capital goods output. Sentiments also remained somber with many agencies criticizing the government over demonetisation of Rs 500 and Rs 1,000 notes, saying the move has led to 'financial chaos' across the country as well as condemning that the decision was taken without proper planning or preparation. Also, the sudden decline in money supply and simultaneous rise in bank deposits post demonetisation is going to adversely impact consumption in the economy in the short term and may lead to a lower GDP growth.  Meanwhile, aviation stocks came under pressure with the government's decision to levy up to Rs 8,500 per flight on major routes to fund the regional air connectivity scheme. The levy amount would be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight. Also, Gems & Jewellery stocks extended their losses on Tuesday after Prime Minister Narendra Modi hinted that his government may come out with stricter measures to curb black money. The Central excise department has asked city’s top jewellers to immediately declare their stock and sale of the past four days. Finally, the BSE Sensex declined 514.19 points or 1.92% to 26304.63, while the CNX Nifty dropped 187.85 points or 2.26% to 8,108.45.