Markets to make a cautious start on sluggish global cues

The Indian markets despite losing some strength in the final hours posted decent gains in the last session, after Moody's Investors Service upgraded India's sovereign rating for the first time in 14 years. Today, the start of the new week is likely to be a bit cautious on sluggish regional cues though the euphoria of Moody’s upgrade will continue. A SBI research report has said that India might not have to wait for 13 long years for next sovereign upgrade by a rating agency, as the government is firm and committed to adhere with the fiscal consolidation path. Traders will also get some support with the IMF data, which forms part of the latest World Economic Outlook report of the International Monetary Fund, stating that India has moved up one position to 126th in terms of per capita GDP of countries, though it still ranked lower than all its BRICS peers. The Aviation stocks will be buzzing with report that India's domestic air traffic registered a growth of 20.52 percent in October when airlines flew 10.45 million passengers as compared to 8.67 million during the corresponding period last year.  There will be some scrip specific actions, as in a key rejig to the BSE Sensex components, private sector lenders, IndusInd Bank and YES Bank will enter the 30-share pack, replacing drug firms Cipla and Lupin, the changes will be made effective at the open of Monday, December 18, 2017.

The US markets ended marginally in red in the last session, the subdued trade for the day reflected lingering uncertainty about the outlook for Republican lawmakers' tax reform plans. Traders even overlooked report showing a much bigger than expected jump in housing starts in the month of October. The Asian markets have made a mixed start with some indices trading lower amid signs of fatigue following a stellar year for the region’s equities and as German Chancellor Angela Merkel’s push to form a coalition government collapsed. Chinese equities were down by about a percent triggered by state media warnings of stocks rising too fast.

Back home, extending their previous session’s rally, Indian equity benchmarks ended the Friday’s trade with a gain of over half a percent, with Sensex and Nifty recapturing their crucial 33,300 and 10,250 levels respectively. Sentiments remained buoyant throughout the session, despite some profit booking in last leg of trade, as Moody’s Investor Service raised India’s government bond rating, citing continued progress in the nation’s economic and institutional reforms. The rating agency upgraded India’s bond rating to ‘stable’ (Baa2) from ‘positive’ (Baa3) and said reforms being pushed through by the government will help stabilize debt. The agency has also upgraded India’s local currency senior unsecured rating to Baa2 from Baa3 and its short-term local currency rating to P-2 from P-3. Traders also took some encouragement with RBI Governor C Rangarajan’s statement who said the inflation, which rose to 3.58% in October, may ease by December and end up below 4% by the end of the current fiscal. Adding to the optimism, Commerce and Industry Minister Suresh Prabhu exuded confidence that exports will gather momentum going forward as the economy is on course to double to $5 trillion and become the third largest in the world, over the next few years. Meanwhile, highlighting ‘massive’ economic reforms undertaken by India, Finance Minister Arun Jaitley has said that the country’s economic slowdown has bottomed out and now it should start moving upwards after recovering from the temporary blip. He acknowledged that there was a ‘temporary blip’ as a result of structural changes initiated by the government. However, markets pare some of their gains to end off day’s highs, as there were some cautiousness too in India Inc. as the Reserve Bank of India is likely to come up with a fresh list of around 50 loan accounts that are either under stress or close to being classified as non-performing assets. The regulator may set a March 31 deadline for banks to find a resolution on these or commence bankruptcy proceedings against the borrowers. Finally, the BSE Sensex soared 235.98 points or 0.71% to 33,342.80, while the CNX Nifty was up by 68.85 points or 0.67% to 10,283.60.