Markets to get a mildly soft start of the final week of 2017

The Indian markets before going for a long weekend surged to its fresh record highs in the last session. Today, the start of the last week of the calendar year is likely to be mildly in red on sluggish regional cues. Traders however, may get some support latter in the day with industry body Assocham’s Year-Ahead Outlook report, which has said that India's economic growth may touch 7 percent next year as the government's policies tilt towards the country's stress-ridden rural landscape in the penultimate year before the 2019 general elections. It said that against GDP growth of 6.3 percent in the second quarter of 2017-18, the economic expansion may reach the crucial 7 percent mark by the end of September 2018 quarter, while inflation may range between 4 to 5.5 percent towards the second half of the next calendar year with the monsoon being a key imponderable. The banking stocks will be in action, as dismissing rumours, both the government and the Reserve Bank has said there was no question of closure of any public sector bank.

The US markets made a modestly lower closing in the last session, while the major averages remained much of the day in red shrugging off the slew of some positive U.S. economic data. Trading activity remained light as many traders looked to get a head start on the Christmas weekend. Most of the Asian markets are not trading today and those which are opened have made mildly negative start.  Japanese market too has given up its gain from near the highest levels since the early 1990s, while China’s currency reached its strongest since September. Investors had little reaction to Japanese data showing a drop in unemployment and slight acceleration in inflation.

Back home, Friday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges ending at all time high levels ahead of Christmas. Markets after an optimistic start traded with traction throughout the session and the Santa Claus rally in final hour of trade helped Nifty to hit 10,500 mark for brief period, but ended tad lower of that level. Sentiments remained up-beat with Reserve Bank of India in its latest edition of the Financial Stability Report enlightened that while the stress in the banking sector remains elevated, it appears to be bottoming out. Some support also came with Chairman of the Economic Advisory Council to the Prime Minister (EAC-PM) Bibek Debroy’s statement that India is expected to be a $6.5-7 trillion economy by 2030, and at the current exchange rate it would touch $10 trillion by 2035-40. He said that India will be remarkably different country as the size of its economy will enhance the country's role in global affairs. Markets continued jubilation in second half of trade as well with traders expecting a good budget and strong H2FY18 earnings. The street however shrugged off the IMF’s report that India’s financial sector is facing considerable challenges with high non-performing assets and slow deleveraging and repair of corporate balance sheets testing the resilience of the banking system and holding back growth. Separately, backed by improvement in major indicators, such as auto production, coal output and rail freight growth, credit rating agency, ICRA in its monthly review on Indian Economy, has said that the growth in the index of industrial production (IIP) is expected to rebound in November after hitting a three-month low of 2.2% in October this year. Finally, the BSE Sensex surged 184.02 points or 0.55% to 33940.30, while the CNX Nifty was up by 52.70 points or 0.50% to 10493.00.