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

The Indian markets reacting to the weak macro data ended in red in the last session, with major benchmarks slipping from the day’s high and deposing around half a percent for the day. Today, the start is likely to remain cautious and traders will be reacting to the US Federal Reserve’s decision to raise interest rates by 25 basis points, though it was on expected lines and majorly priced in. On the domestic front traders will be concerned with the Reserve Bank of India (RBI) data showing that India’s current account deficit (CAD) widened to 1.2 percent of GDP or $ 7.2 billion in July-September, from 0.6 percent of GDP or $ 3.4 billion reported in the same period a year ago. Meanwhile, the trade deficit widened to $ 32.8 billion in the previous quarter from $ 25.6 billion a year ago. There will be buzz in the India Inc as with the end of RBI's deadline to resolve the 28 large stressed accounts that the regulator had identified on its second list, banks are set to refer as many as 23 of them for insolvency proceedings. The paper stocks will keep buzzing on reports that paper and paperboard imports touched an all-time of 10.5 lakh tonnes in the first half of this fiscal, up 60 per cent from 6.5 lakh tonnes logged in the same period last year. Traders will be eyeing the WPI inflation data too, to be announced later in the day.

The US markets ended higher in the last session, and the upward move on the day lifted the Dow and the S&P 500 reach new record highs, as Fed raised its benchmark rate by a quarter percentage point to a target range of 1.25 percent to 1.5 percent, it still doesn’t see inflation accelerating. The Asian markets have made a mixed start as the dollar maintained losses after the Federal Reserve raised its outlook for U.S. growth and held its forecast for the number of interest-rate increases next year amid benign inflation.

Back home, extending previous session butchery, Indian equity benchmarks once again ended the session with a cut of around half a percent, breaching their crucial 10,200 (Nifty) and 33,100 (Sensex) levels. Markets started the session on pessimistic note with traders reacting negatively to the macro economic data. Sentiments remained dampened after the industrial production growth hit a three-month low of 2.2% in October this year, mainly due to subdued performance of manufacturing and mining sectors coupled with a contraction in output of consumer durables. The IIP grew 4.14% in September this year. Industrial output rose by a meager 2.5% in April-October this fiscal as compared to 5.5% in the same period of 2016-17. Moreover, consumer inflation rose to 4.88% in November from 3.58% in October and 3.63% in the year earlier, exceeded the RBI’s forecast of 4.2-4.6% for the second half of the year. The higher-than-expected retail inflation effectively rules out any rate cuts in the near future by the Reserve Bank of India even as industrial growth remains muted. However, markets took U-turn and entered into green terrain with traders taking support with a private survey report, stating that India is the third most optimistic nation in hiring intentions as 22% of employers are expected to add more staff in the next three months. It further said that workforce gains were expected across all seven industry sectors monitored and in all four regions. Another private report enlightened that the gap between China and India’s prosperity has narrowed by four ranks since 2016 and to a quarter of what it was in 2012. The upward trend in India’s prosperity is significant in view of the fact that India registered lower gross domestic product (GDP) growth following demonetization and implementation of the GST reform in 2017. But sharp selloff in final hour of trade dragged markets back into negative terrain, as traders opted to book profit at higher levels ahead of Wholesale Price Index (WPI) data to be released tomorrow. Sentiments also weighed down on report that Asian Development Bank (ADB) scaled down its current fiscal year GDP growth forecast for India to 6.7% from prior estimate of 7%.Finally, the BSE Sensex declined 174.95 points or 0.53% to 33,053.04, while the CNX Nifty was down by 47.20 points or 0.46% to 10,192.95.