Markets to remain in cautious mood on mixed global cues

The Indian markets lost their initial momentum and ended with modest cuts in last session, led by the market heavyweight RIL whose GRM came lower than expected. Today, the start is likely to be soft to cautious on mixed global cues. Though, there will be some support with an UN report claiming that India was still the fastest growing large developing economy and that the country would grow by 7.7 percent in the financial year 2017. The United Nations World Economic Situation and Prospects (WESP) 2017 report has said that India's economy is projected to grow by 7.7 percent in fiscal year 2017 benefiting from strong private consumption and gradual introduction of significant domestic reforms. The report also predicted a 7.6 percent growth for the financial year 2018. Traders will be eyeing the Reserve Bank of India Governor Urjit Patel’s explanation to the decision of demonetisation and its effect on economy, while appearing before a parliamentary panel today. There will be some buzz in the renewable power companies stocks, as the minister of state with independent charge for power, coal, new and renewable energy and mines, Piyush Goyal has said that India is committed to meet its renewable energy goals and is not bothered about US president-elect Donald Trump's skepticism on policies related to climate change.

The US markets made a soft closing in last session, coming after a long weekend and the tech-heavy Nasdaq pulled back off the record closing high set last Friday. The financial stocks contributed to the overall weakness on Wall Street. The Asian markets have made a mixed start with some indices trading modestly in red. The Japanese market too was in red on yen’s strength on policy uncertainty ahead of Donald Trump’s inauguration.

Back home, after trading on a feeble note for most part of the session, Indian benchmark indices ended in the negative terrain, as investors remained on the sidelines and refrained from any buying activity ahead of corporate results and the government budget. The government will unveil its Budget on February 1 and investors hope for incentives to support an economy hit by cash shortages after a ban on higher-value banknotes. Sentiments remained dismal with report that International Monetary Fund (IMF) cut India's growth forecast for the current fiscal by one percentage point, due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative. In an update of its flagship publication the World Economic Outlook, the IMF said India is likely to grow by 6.6% only in FY17, down from 7.6% estimated earlier and marginally behind China that is pegged to grow at 6.7% in 2016.  However, losses remained capped with report that the Goods and Services Tax (GST) Council on Monday broke a deadlock over issues of administrative control over assessees and broadly agreed to roll out the GST from July 1, instead of the earlier deadline of April 1. Under the proposed tax regime, 90% of all assessees with a turnover of Rs 1.5 crore or less will be assessed for scrutiny and audit by state authorities, the remaining 10% by the Centre. The Council also resolved a logjam over the right to tax economic activities within 12 nautical miles from India’s coasts. Some support also came with the private report indicating that Indian consumers remain the most optimistic in the Asia-Pacific region and their outlook on economy and stock market showed highest levels of confidence even after their government's recent demonetisation measure. The report is based on a survey conducted across 17 markets in Asia Pacific, between November 2016 and December 2016. Finally, the BSE Sensex declined 52.51 points or 0.19% to 27235.66, while the CNX Nifty was down by 14.80 points or 0.18% to 8,398.00.