Markets to start the new series on slightly positive note

The Indian markets moved higher in the last session supported by short covering at the end of the December F&O series expiry. Today the start of the new series and the final trading session of the calendar year is likely to be in green. Traders will be eyeing some big-ticket measures to boost the Indian economy by Prime Minister Narendra Modi, in his year-end address to the nation on December 31, after the deadline to deposit the old Rs. 500 and Rs. 1,000 notes in banks will end today. Meanwhile, Finance Minister Arun Jaitley has said that the impact of demonetisation is clearly visible with tax collection figures seeing double-digit growth. He had said that there has been a 26.2 per cent increase in central indirect tax collection till November 30, while till December 19, direct tax collection increase has been to the extent of 14.4 per cent against a growth rate of only 8.3 per cent previous year. RBI Governor Urjit Patel too has said that the demonetisation exercise will have 'far reaching changes' towards a transformative effect on the economy going forward, despite some short-term disruptions and 'public hardship'. There will be some encouragement to the traders with the Reserve Bank of India (RBI) easing norms for working capital lending to micro and small enterprises (MSEs) on difficulties faced by them, as a result of the sudden withdrawal of legal tender status of high-value currency notes. There will be some buzz in the sugar stocks on report that the Central government doesn’t have immediate plans to lower import duties on sugar as it did with wheat.

The US markets coming off the early highs ended modestly lower in the last session, though selling pressure remained subdued, limiting the downside for the major averages. The Asian markets have made a mixed start with Japanese market trading lower heading toward its first annual loss since 2011, while Chinese shares advanced on the final day of trading.

Back home, the last day of December series futures and options contract expiry turned out to be a good session for the Indian equity indices as they managed to settle with gains of over half a percent. Sentiments got some support with the report that the Reserve Bank of India (RBI) further extended the grace period for banks, non-banking finance companies and microfinance companies to classify bad loans by 30 days in the case of agriculture and term loans of up to Rs 1 crore.  Short-covering on the back of F&O expiry and the appreciation in Indian rupee value against the dollar added to the optimistic sentiments. The rupee appreciated by 16 paise to 68.09 against the US dollar at the time of equity markets closing at the Interbank Foreign Exchange. Investors got some comfort with minister of State for Finance Arjun Ram Meghwal saying that once the entire process of cash ban is completed, consumption and investments will pick-up rapidly. According to him, the move will increase the tax base and improve gross domestic product (GDP) by 2 percent. However, worries about capital outflows from emerging markets to the United States have hit sentiment since November. Foreign investors offloaded net $100.58 million of shares on December 27, having sold $975.80 million worth of local shares this month. On the global front, Asian equity markets ended mixed on Thursday, while European shares opened slightly lower with all sectors in negative territory in early deals as banking shares and miners fell.  Back home, finally, the BSE Sensex gained 155.47 points or 0.59% to 26366.15, while the CNX Nifty rose 68.75 points or 0.86% to 8,103.60.