Markets to make a soft-to-cautious start on sluggish global cues

The Indian markets despite mild choppy trade managed a modestly positive close in the last session. Today, the start is likely to be soft-to-cautious amid sluggish global trend and as the global credit rating agency Fitch Ratings has cut India's FY18 GDP growth forecast to 6.7 percent from 6.9 percent projected earlier, saying the rebound was weaker than expected due to one-off factors like the demonetization program and disruptions related to the implementation of GST. Simultaneously, the global rating agency has pared the FY19 forecast for the country to 7.3 per cent from 7.4 per cent. Traders will be eyeing the two-day policy review by RBI beginning today. The Reserve Bank is likely to keep the key rate unchanged on Wednesday and stay focused on inflation control as the rebound in September quarter GDP growth. There will be some buzz in the export oriented stocks as the key policymakers led by Commerce Minister Suresh Prabhu will unveil the mid-term review of the foreign trade policy today. Exporters have been voicing concerns about challenges on account of implementation of GST.

The US markets made a mixed closing in the last session and while the Dow reached a new record closing high, the Nasdaq and the S&P 500 ended the day in negative territory. Traders were cautiously reacting to news that Senate Republicans narrowly approved a massive tax reform bill early Saturday morning. The Asian markets have made a mixed start tailing the US markets and after the gains in US equities spurred by the tax bill passage petered.

Back home, Indian equity benchmarks ended the choppy day of trade with marginal gains on Monday, as traders remained on the sidelines ahead of Reserve Bank of India’s (RBI) monetary policy meeting which is scheduled to begin on December 5. The central bank is widely expected to keep rates on hold, investors will watch out for any hints of a cut in its policy statement. Markets after a cautious start gained some ground and traded in green for most part of the day’s trade but in narrow range. Sentiments remained positive with former vice-chairman of NITI Aayog Arvind Panagariya’s statement that the economy will grow by over 6.5% in the current financial year. He said the macroeconomic indicators have remained stable for the past three years with current account deficit hovering around one per cent and inflation moderating. Traders also took some solace with the statement of Mukesh Ambani, Reliance Industries chairman that India’s GDP will double to $ 5 trillion in the next seven years and hit $ 10 trillion by 2030 as it will elbow out China by the middle of 21st century. Meanwhile, the International Monetary Fund (IMF) has said that it will update its growth rate forecast for India in January. Finance Minister Arun Jaitley’s statement that the GST has made doing business easier for traders, to spread business activities in the country, too aided sentiments. He added the market place for traders had opened the horizons and there is lesser tax compliance burden. However, gains remained capped with Chief Economist at World Bank Kaushik Basu expressing disappointment at the 6.3% GDP expansion in the September quarter said that with oil prices so low, India’s economic growth should have been back at over 9%. He added that this massive slowdown needs to be properly diagnosed. Sentiments also weighed down on private report stating that CPI inflation is expected to firm up in the coming months driven by cyclical recovery in the economy and further implementation of pay commission-related hikes by states. Finally, the BSE Sensex gained 36.78 points or 0.11% to 32,869.72, while the CNX Nifty was up by 5.95 points or 0.06% to 10,127.75.