Markets to make a flat-to-cautious start on mixed global cues

The Indian markets lost all the early momentum and showed some volatility in the final leg of trade to end with modest gains only in the last session. Today, the start is likely to remain flat on mixed global cues, though there will be some cautiousness too with US Fed Chair Janet Yellen sparking rate hike fear. On the domestic front traders will be getting some support with Minister for Road Transport and Shipping Nitin Gadkari’s statement, who showcasing India's growth story before global business leaders at WEF annual meeting, said it is the appropriate time to invest in the country and added that the country is also working on ways to improve purchasing power of common men as that will present further opportunities. Meanwhile, Reserve Bank of India Governor Urjit Patel appearing before the Parliament's standing committee on finance has said that the discussions between the central bank and the government over the demonetisation issue began in early 2016 and also said that Rs 9.2 lakh crore worth of new currency notes have been put into the system since demonetisation. There will be some buzz in electronic manufacturing companies, as the Cabinet has approved the modified version of a key scheme that incentivizes electronics manufacturing in the country. Some important earnings announcements too will keep the markets buzzing.

The US markets showed a lackluster trade and ended mixed in last session, mainly due to uncertainty about President-elect Donald Trump's policies ahead of his inauguration on Friday and traders largely overlooked Labor Department report showing that consumer prices rose in line with estimates in December. The Asian markets have made a mixed start tailing overnight cues from Wall Street, though the Japanese market has bounced back with yen falling against the dollar after Janet Yellen said the American economy is strong enough to warrant higher interest rates.

Back home, erasing most of their initial gains, Indian equity benchmarks ended the Wednesday’s trade with marginal gains. Local bourses made a jubilant start 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. Some support also came with report that Income Tax (I-T) Department soothed foreign investors’ nerves by putting in abeyance its December 21 circular that amplified their concerns over a potential rise in tax liability. However, markets pared most of their gains in second half of the session as traders opted to book profit at higher levels ahead of a crucial meeting of Parliament’s standing committee on finance over the demonetisation issue with Reserve Bank of India Governor Urjit Patel. Traders also remained on sidelines ahead of the Union Budget 2017 as they hope for incentives to support an economy hit by cash shortages after a ban on higher-value banknotes. Market participants also remained cautious after private poll report showed that India’s economy lost momentum in the final three months of 2016 after Prime Minister Narendra Modi’s ban on high-value notes hurt consumption and businesses but it is set to pick up this quarter. Having posted growth of above 7 percent for six consecutive quarters, India’s gross domestic product is expected to have expanded just 6.5 per cent in the October-December quarter - the weakest in nearly three years. On the global front, European markets opened mostly in green helped by a slew of well-received company results from ASML, Novozymes and Burberry, though shares in Pearson slumped after its update, while Asian markets ended mostly in green. Backhome, finally, the BSE Sensex gained 21.98 points or 0.08% to 27,257.64, while the CNX Nifty was up by 19.00 points or 0.23% to 8,417.00.