Markets to make a soft start of the last week of the year

The Indian markets finally snapped their long losing streak on Friday and the major averages posted modest gains, though the trade remained choppy lacking any major supportive cues. Today, the start of the final week of the calendar year which will also see the F&O series expiry, is likely to be weak one and there will be some concern with Prime Minister Narendra Modi's statement that his government would not hesitate to make tough decisions to help support its growing economy and his suggestion that people earning from financial markets must make a 'fair contribution' to nation building. The comments were interpreted as a pitch for higher taxes on income from capital markets. However, Finance Minister Arun Jaitley has said that the government does not plan to impose a long-term capital gains tax. He also said that his government was doing its best to ensure GST implementation from April 1, 2017.  Traders may remain concerned with domestic rating agency ICRA's  latest report stating that India's gross value added growth is likely to be at 6.6 percent in 2016-17 as economic activity will take more time to normalise following the government's move to demonetise high-value notes. Marketmen may get some support in latter trade with report that the National Academy of Customs, Excise and Narcotics (NACEN), in order to implement the new indirect tax regime, has already trained about three-fourth of the targeted 60,000 field officials. There will be some buzz in realty stocks, as the Prime Minister has said that a law against ‘benami’ property would be brought in soon.

The US markets made a positive close in last session, before a long weekend supported by some positive economic reports. The Asian markets are mostly not trading today, while those who are trading have made a mixed start Japanese market opened flat on Monday in quiet holiday trading following a three-day weekend.

Back home, snapping seven days losing streak, Indian equity benchmarks ended the session slightly in green on Friday as traders opted to buy beaten down but fundamentally strong stocks after seven days of continues drubbing. Markets made weak start and traded subdued in early deals, tracking sluggish global cues. Sentiments also remained dampened on report that the share of foreign portfolio investments (FPI) through participatory notes (P-notes) slipped to its lowest level in nearly three years to Rs 1.79 lakh crore in end-November. P-Notes investments have fallen to a 33-months low, the total value of P-Notes investment in Indian markets equity, debt and derivatives has plunged to Rs 1,79,648 crore in November-end, from Rs 1,99,987 crore at the end of October. Though, domestic gauges pared all of their initial losses and entered into green terrain, as traders took some encouragement with some signs of thaw appearing on the GST issue, and the prospects of early roll out of goods and services tax (GST) brightening with the states and the Centre making progress on a crucial legislation, amid indications that the states may get concessions to tide over possible demonetisation-related revenue loss. Some support also came after NITI Aayog vice-chairman Aravind Panagariya has termed Prime Minister Narendra Modi's demonetisation scheme as a “frontal attack” on black money and said that more such actions are in store to curb corruption. Traders also got some sense of relief with Union Minister for Statistics and Programme Implementation D. V. Sadananda Gowda’s statement that demonetisation could bring down the growth rate by just 0.2 percent and not more than that. He added that India’s GDP stood at 7.6 percent and it may go down to 7.4 percent. On the global front, Asian markets ended mostly in red, with investors looking to US economic data scheduled later in the day for potential catalysts. Back home, on the sectoral front, auto stocks remained under pressure on reports that the Centre is looking at introducing a law where one may not be allowed to register new car or any other vehicle unless he produce proof that he has adequate parking space for it. Finally, the BSE Sensex gained 61.10 points or 0.24% to 26040.70, while the CNX Nifty was up by 6.65 points or 0.08% to 7985.75.