Markets to extend the consolidation mood with a somber start

The Indian markets after completely losing their momentum in the final hours, ended marginally in the red in the last session. Today, the start is likely to remain cautious and bourses will extend their consolidation mood. Traders will be concerned with the details of the minutes of the MPC meeting held on December 5 and 6 released by the RBI, where RBI Governor Urjit Patel flagged concerns over rising global oil prices and uncertainties on fiscal and external fronts. Two other members in the panel, Deputy Governor Viral Acharya and Executive Director Michael Debabrata Patra, flagged the issue of inflation in petroleum products. Meanwhile, the Union Cabinet approved the Consumer Protection Bill, 2017, paving the way for its introduction in Parliament. Once approved by Parliament, the new law will replace the current Consumer Protection Act, 1986. There will be some buzz in the textile stocks, as the Cabinet Committee on Economic Affairs has approved the scheme for Capacity Building in Textile Sector (SCBTS). The scheme will be applicable from 2017-2018 to 2019-2020 with an outlay of Rs 1,300 crore.

The US markets continued their consolidation mood and ended modestly lower in last session, failing to sustain an initial upward move on news that Republican lawmakers managed to send a sweeping tax reform bill to President Donald Trump's desk. The House voted 224 to 201 in favor of the bill known as the Tax Cuts and Jobs Act, with the vote coming down largely along party lines. The Asian markets have made a mixed start after U.S. equities dipped in the wake of congressional passage of U.S. tax cuts, which was already priced in.

Back home, snapping four days gaining streak, Indian equity benchmarks ended the choppy day of trade slightly in red, as traders opted to book profit near all time high levels. After making cautious start, markets gained some traction and entered into green terrain to trade above neutral lines for most part of the day with traders getting some support from Commerce & Industry Minister Suresh Prabhu’s statement that the government is working on a strategy to boost share of services in total exports from the country. He said ‘In my opinion services should be one of the most critical drivers of the growing economy and must be brought to the forefront’. Prime Minister Narendra Modi’s electoral victories in key states continued to lend support to the markets, but focus has now shifted to Budget and macros.  However, sharp selling in last leg of trade played spoil sports for the local bourses and dragged them back into red terrain. Sentiments turned down-beat after Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest quarterly survey has said that manufacturing sector outlook is slightly less optimistic in third quarter of the current fiscal year (Q3). It reported that overall the capacity utilization in manufacturing remains low. The average capacity utilization for the manufacturing sector is about 75% for Q-2 2017-18 as reported in the survey which is similar to that of Q-1 2017-18. Meanwhile, some caution set in ahead of the release of the minutes from the Reserve Bank of India’s policy meeting earlier this month in which the policy rate was kept unchanged. Finally, the BSE Sensex shed 59.36 points or 0.18% to 33,777.38, while the CNX Nifty was down by 19.00 points or 0.18% to 10,444.20.