The Indian markets picked up pace in the final hours of last session to post gains of over half a percent. Today, the start is likely to be in green despite negative global cues. Traders will be taking support from the domestic developments, where all the exit polls indicated both Himachal Pradesh and Gujarat going in favour of ruling BJP. Exit polls conducted by various polling agencies have predicted that BJP would retain Gujarat, the major battle ground despite a reduced margin of seats in the 182-member assembly. Traders will also be eyeing the start of the winter session of Parliament. During a total of 14 sittings over a duration of 22 days, both the Houses, Lok Sabha and Rajya Sabha, will take up 25 Bills, including GST compensation to states, for consideration and passing. Meanwhile, Finance Minister Arun Jaitley has emphasised the need to continue the momentum on infrastructure creation and expedite investment in railways to propel the Indian economy. There will be some support to the markets with global rating agency Moody’s statement that it has a stable outlook for non-financial corporate in the country, except for telcos, on which it has a negative outlook for 2018. It said that stable outlook is underpinned by the expectation that GDP growth of around 7.6% will result in higher sales volumes.
The US markets made a modestly lower closing in the last session and the Dow pulled back into negative territory after reaching a new record intraday high. There was some concern on uncertainty about the outlook for the Republican tax reform plan after Senator Marco Rubio, R-Fla., indicated his opposition to the legislation currently being negotiated. The Asian markets have made mostly a lower start and some indices are down by about a percent as investors assessed messages from Federal Reserve and European Central Bank meetings and amid lingering concerns about the Republican tax overhaul package.
Back home, Indian equity benchmarks ended the choppy day of trade in green terrain, as traders opted to buy beaten down but fundamentally strong stocks in dying hour of trade ahead of exit poll results of Gujarat election. After a cautious start, markets entered into red terrain and traded cautiously as the Federal Reserve delivered a much-anticipated interest rate hike but flagged caution about inflation, tempering expectations for future tightening, which weighed on the dollar and Treasury yields. Traders also remained 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. Markets extended losses and hit intraday lows to breach their crucial 32,900 (Sensex) and 10,150 (Nifty) levels in noon deals after India’s annual rate of inflation based on wholesale prices rose in the month of November, due to increasing prices of food and fuel products. The WPI surged to 3.93% in November 2017 from 3.59% in October 2017 and 1.82% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 2.74% compared to a build up rate of 3.90% in the corresponding period of the previous year. However, strong recovery in dying hour of trade took markets into green terrain as traders went for bargain hunting ahead of Gujarat exit poll results to be released tomorrow. Traders also took some support with reports that the government will hold consultations with the RBI to work out a mechanism to bring down merchant discount rates (MDR) that have gone up to 0.90% recently from 0.25% of transaction value. Some support also came with a private report stating that India’s economic growth has bottomed out and the GDP growth will recover further to 7% over the next few quarters. Finally, the BSE Sensex surged 193.66 points or 0.59% to 33,246.70, while the CNX Nifty was up by 59.15 points or 0.58% to 10,252.10.
