Markets to make a cautious start of the final trading day of 2017

The Indian markets extended their decline for the second day and ended marginally lower in the last session amid volatility of the F&O series expiry. Today, the start of the new series and the final day of the calendar year is likely to be cautious on sluggish regional cues. Traders will be a bit concerned with a study report of the industry body Assocham, which has said that a slowdown in the economy coupled with high stress level in the banking sector is expected to restrict credit growth at around 8 per cent during the current fiscal despite government’s thrust on loan expansion. Also, a report from rating agency ICRA has said that rising commodity prices, especially that of crude oil that has hit a three-year peak last week, will double current account deficit (CAD) to $39 billion or 1.5 per cent of GDP this fiscal year. There will be some buzz in the India Inc and the banking stocks as the RBI has turned down requests from banks to extend the deadline for restructuring the debt of companies on a second list. This will mean bankruptcy proceedings likely kicking off at the National Company Law Tribunal (NCLT) by December 31. Telecom stocks especially Anil Ambani's debt-laden Reliance Communications will be in focus, as the company has signed an agreement to sell its wireless assets to Reliance Jio Infocomm, the telecoms arm of elder brother Mukesh Ambani's Reliance Industries.

The US markets despite a choppy trading ended in green in the last session, with the Dow reaching a new record closing high, however many traders remained away from their desks ahead of the New Year's weekend, leading to another light trading day. The Asian markets have made a mixed start on the final trading day of 2017 Japanese equity benchmarks opened higher even though the yen held gains.

Back home, Indian equity markets truly depicted the choppiness of F&O expiry session and ended the session slightly in red on Thursday. However, both Sensex & Nifty were up by over 2% during the December F&O series. Key gauges traded lackluster throughout the session and volatility which emerged in dying hour of trade mainly dragged the bourses lower on lingering concerns over government borrowing exceeding target. Cautiousness persisted in the markets throughout the session with the government decision to make additional borrowing of Rs 50,000 crore this fiscal through dated securities, a move that may put burden on the fiscal deficit target of 3.2 percent of GDP. At the same time, the government lowered its borrowing through short-term treasury bills by Rs 61,203 crore. This has made the task of exactly calculating the fiscal deficit a bit tedious exercise. However, losses remained capped, as traders took some solace with report that the capital markets regulator, Securities and Exchange Board of India (SEBI) is likely to ease entry norms for FPIs willing to invest in the Indian markets. It may ease some rules, including expanding the eligible jurisdictions for registration by including countries with diplomatic tie-ups with India. Market participants also get some comfort with EEPC India new chairman, Ravi P Sehgal’s statement that the year 2018 is expected to be a good year for exports on back of global trade boom. The chairman added that as the IMF has outlined, that the global trade has grown at a faster clip than the overall world output growth, as the US, Euro zone, Japan and China are witnessing a resurgence in economic activity. Investors also get some relief with credit rating agency, ICRA’s latest report stating that the retail credit growth for non-banking financial companies is likely to be moderate at 16-18 percent in the current fiscal, helped by some asset classes, such as SME credit. Finally, the BSE Sensex declined 63.78 points or 0.19% to 33,848.03, while the CNX Nifty was down by 12.85 points or 0.12% to 10,477.90.