Markets to get a cautious but positive start; Q2 GDP data eyed

The Indian markets slipped in last leg of trade but managed a modestly positive close in last session. Today, the start is likely to be cautious but in green and traders will be eyeing the second quarter GDP data slated to be announced later in the day. The general expectation is that economic growth accelerated to 7.5 per cent in the September quarter from 7.1 per cent in the June quarter but lower than 7.9 per cent growth posted for the March quarter. There will be some respite to India Inc with Reserve Bank of India's (RBI) decision to allow bank customers to withdraw amount over and above the weekly limit provided the deposits had been made in legal tender. Also, a private report has said that government is expected to meet its fiscal deficit target of 3 percent for the next financial year on account of additional revenue from penalty on black money and deposits under the income disclosure. However, there will be some cautiousness too, with Fitch Ratings lowering India’s GDP growth forecast for this fiscal to 6.9 per cent from 7.4 per cent, saying there will be “temporary disruptions” to economic activity post demonetisation. The PSU oil marketing companies will be in action as global oil prices dropped nearly 4 per cent amid hints that that oil exporters were struggling to agree on a deal to slash production.

The US markets despite paring most of their gains managed a positive close in last session; the pullback from the highs was mainly due to uncertainty ahead of the highly anticipated OPEC meeting on Wednesday. The Asian markets have made mostly a positive start, though the trade was cautious due to uncertainty ahead of the highly anticipated OPEC meeting in Vienna later in the day. Gains in Asian property shares outweighed losses among commodity producers. 

Back home, Indian benchmark indices extended their gains for yet another session on Tuesday, on account of fresh buying activities by both funds and retail investors amid mixed global cues. It turned out to be a rather volatile day of trade as what started on a promising note ended as a dismal show. Sentiments remained optimistic in thin trades triggered by the Commerce and industry minister Nirmala Sitharaman’s statement that the economy grew by 7.1% in the first half of 2016-17, though the central statistics office is yet to release Gross Domestic Product (GDP) data for the second (July-September) quarter. She added that the government has been taking various steps to boost industrial production and growth, which includes ‘Make in India’ and ‘Startup India’ initiatives, liberalisation of FDI (Foreign Direct Investment) policy and development of industrial corridors. Following Wednesday’s GDP data, attention will shift to a purchasing managers’ index due Thursday that will offer a first assessment of the impact on manufacturing. Investors’ morale also remained upbeat with the report indicating that the Reserve Bank of India will lower its repo rate by 25 basis points to 6 percent in its next month monetary policy meeting. While global uncertainties and rupee volatility suggest first quarter of 2017 is a better time to ease rates, the central bank may bring forward the rate cut to December to support growth and tap favourable inflation outlook. Meanwhile, Auto and consumer durables stocks gained on the expectation that a faster end to the demonetisation drive could revive sales. RBI on  November 28 said lenders had received Rs. 8.45 lakh crore ($123.05 billion) in deposits, absorbing a substantial amount of the 500 and 1,000 rupee notes that were declared worthless earlier this month. The amount deposited, announced by the RBI, raised hopes that the demonetisation process would end sooner than expected reducing what has been a key constraint for markets. Finally, the BSE Sensex gained 43.84 points or 0.17% to 26394.01, while the CNX Nifty rose 15.25 points or 0.19% to 8,142.15.