Markets to make a cautious start reacting to weak IIP data

12 Dec 2016 Evaluate

The Indian markets despite some choppiness managed to extend the gaining streak in last session, ending modestly higher, today the start is likely to be cautious and all eyes will be on global development and Fed meeting, traders will first be reacting to report of Industrial production shrinking an annual 1.9% in October, worsening from a 0.7% rise in the previous month and 9.8 per cent growth in the year-ago month. Industrial production has contracted in four out of seven months so far this fiscal. In the April-October period, production declined 0.3 per cent compared with 4.8 per cent growth last year. However, traders may get some consolation with government data showing robust growth in November indirect tax collection. Net indirect tax collections grew 23.1 per cent in November from a year ago. Overall, net indirect tax mop-up was up 26.2 per cent in April-November from a year ago while net direct tax increased 15.1 per cent over this period. Total direct and indirect tax collections at the end of November stood at Rs 9.64 lakh crore, nearly 60 per cent of the budget target of Rs 16.26 lakh crore for FY17. Marketmen will also look for any developments from the 6th meeting of the Goods and Services Tax Council, which commenced on Sunday in the shadow of demonetization, seeking to finalise three legislations -- Central GST, Integrated GST and the Compensation law. There will be some scrip specific actions with the Competition Appellate Tribunal (COMPAT), in a series of orders sent back a case against DLF, set aside an order against Lupin and reduced penalty on three auto companies. PSU oil marketing companies too will be buzzing, as OPEC and non-OPEC producers on Saturday reached their first deal since 2001 to curtail oil output jointly and ease a global glut.

The US markets continued their rally in a string of record-breaking trading days, with the S&P 500, Dow Jones industrial average and Nasdaq each closing higher every day in the week. Traders were eyeing key data, including reports on housing, inflation, consumer spending and manufacturing apart from the crucial FOMC meeting in the next week. The Asian markets have made a mixed start.

Back home, It turned out to be a lackadaisical performance from the benchmark indices on Friday as they traded in tight range and finished the session only with modest gains after showing huge rally in last session. Investors got some comfort with CBEC Chairman Najib Shah’s statement that the GST Council may in future decide to reduce the tax slabs under the Goods and Services Tax (GST) regime after analyzing the revenue garnered and the compensation payouts to states. He said that any change in tax slab is possible after assessing the revenues and the effect of exemptions and deductions given in the new tax regime and analyzing it with the expenditure. Some support also came with the reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 698.86 crore on December 08, 2016. Meanwhile, defending the ban on high-currency notes, the government told the Supreme Court that it is not sitting around doing nothing and all the problems will be over in another 10-15 days. On the concern note, oil marketing companies declined after the government announced 0.75% discount on digital purchases of petrol and diesel from state owned outlets, while Auto stocks slipped after the report that the total vehicle sales across categories witnessed a decline of 5.48% at 15.63 lakh units during the month of November 2016. Several pharma stocks also observed selling pressure on the report that the Indian pharmaceutical industry will grow at a slower pace due to sluggish growth in the US market, increased competition leading to price erosion in high single digits and generic adoption reaching saturation levels. On the global front, Asian equity markets made a mixed closing on Friday as investors turned jittery after the European Central Bank (ECB) trimmed the size of its asset purchase programme and also extended till end 2017. Back home, finally, the BSE Sensex gained 52.90 points or 0.20% to 26747.18, while the CNX Nifty added 14.90 points or 0.18% to 8,261.75.

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Name of the IA registered with SEBI:	The Alchemists Ark Pvt. Ltd.
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SEBI Registration Number:	INA000013323 Validity - May 16, 2019 - Perpetual
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