Markets to extend gains with a positive start

The Indian markets surged to fresh record highs in last session, helped by positive global cues and earnings optimism. Today, the start is likely to be in green and the benchmarks will extend their gains on positive regional cues. Traders will also be getting some support with reports that the Commerce and Industry Ministry is mulling incentives for States that play a proactive role in promoting exports as it will help boost economic growth. However, there will be some cautiousness too with the rating agency Crisil attributing the continuing slowdown to the impacts of the demonetisation, GST implementation and weakness in agriculture, though it has maintained its FY19 growth estimate at 7.6 per cent on the low base. It also said that private consumption will grow 6.3 per cent in FY18, over a high base of an 8.7 per cent growth in FY17, and will remain the biggest contributor to GDP at 55.7 per cent. Cigarette stocks will be under pressure, as in a setback to the cigarette and tobacco industry, the Supreme Court stayed a Karnataka High Court order quashing 85% pictorial warnings on packs containing such products. On the other hand there will be some buzz in the FMCG stocks with a private report stating that in the next 12 months, consumer goods companies would see a revival, both in volume and margin terms, with an anticipated revival in the rural sector.

The US markets made mostly a positive closing in the last session, though trade remained choppy and lackluster, as traders expressed some uncertainty about the near-term outlook for the markets following the recent run to record highs. The Asian markets have made a green start and the Japanese market was up by about a percent as traders returned from a holiday following new all-time highs for U.S. shares. Though, they pared some of their gains after the yen’s advance in wake of the announcement by the BOJ, which made a small tweak to its buying of longer-dated debt.

Back home, bulls tightened their grip on Dalal Street and key gauges traded jubilantly throughout the session with Sensex and Nifty surpassing their crucial 34,300 and 10,600 levels, hitting fresh record highs, respectively. After making a gap-up start, Indian equity benchmarks traded with traction to end at fresh closing high levels, as traders took some encouragement with report that credit growth after a long gap grew in double digits to 10.65% at Rs 80,96,727 crore in the fortnight ended December 22, 2017 due to the base effect. Sentiments also remained up-beat from Economic Advisory Council to the Prime Minister (EAC-PM), Bibek Debroy’s statement that India's advance GDP growth estimate of 6.5% for this fiscal shows reform measures taken by the government is yielding results and growth will accelerate to over 7% in 2018-19. Besides, report that overseas investors poured in a staggering Rs 1.5 lakh crore in the Indian debt markets in 2017 on the back of higher bond yields and stable currency, after pulling out massive funds in the preceding year, too aided sentiments. Traders completely ignored Central Statistics Office’s (CSO) first advance estimates of GDP growth for current financial year which highlighted that the Indian economy is expected to grow at a slower 6.5% in 2017-18 compared to the 7.1% in 2016-17. According to CSO, the Gross Domestic Product (GDP) at constant (2011-12) prices for 2017-18 is likely to attain a level of Rs 129.85 lakh crore. Meanwhile, the agriculture ministry said that the country’s agriculture sector is expected to grow higher than projected 2.1% growth by the CSO for the current fiscal, following better rabi crop prospects. The ministry added that the agriculture sector can, therefore, be expected to register a much higher GVA for the year 2017-18, when final estimate figures are released. Finally, the BSE Sensex surged 198.94 points or 0.58% to 34,352.79, while the CNX Nifty was up by 64.75 points or 0.61% to 10,623.60.