Indian markets failed to hold seven-day gaining momentum and ended tad lower on Thursday amid weakness in Asian peers, after the US central bank dashed investor hopes for a more dovish policy outlook. Today, the markets are likely to make pessimistic start following weak global cues as the markets were affected by the US top bank’s plan to continue its balance sheet reduction and the threat of a partial government shutdown. There will be some cautiousness with the central bank’s statement that the total external commercial borrowings (ECB) will now be rule-based and will be capped at 6.5% of the gross domestic product. The limit now works out to be about $160 billion for the current fiscal year, against the actual outstanding of $126.29 billion as on September 30. The central bank already has a rule-based exposure for foreign investors’ exposure in bonds. Foreigners are allowed to invest up to 6% of the outstanding debt. However, some support may come later in the day with report that the Lok Sabha passed the Consumer Protection Bill, and the government introduced a Bill to amend the Companies Act to further improve the ease of doing business and ensure better compliance levels. The Consumer Protection Bill seeks to strengthen the rights of consumers and provide a mechanism for redressing complaints regarding defects in goods and deficiency in services. Traders may take note of a report that the government will infuse Rs 830 billion into public sector banks in the remaining months of 2018-19, taking capital injection into lenders to Rs 1.06 trillion in the year. Of this, it has sought Parliament’s approval for Rs 410 billion through the second batch of the supplementary demand for grants. The Budget had announced a capital infusion of Rs 650 billion. Meanwhile, the coming Goods and Services Tax (GST) Council meeting will primarily delve into issues that will ease the filing of returns and the refund processes for small and mid-size businesses. Moreover, the government is taking steps for implementing methanol economy in India and has constituted five task forces including its production from high ash coal. There will be some buzz in the banking sector stocks with the Reserve Bank of India’s (RBI) data showing that bank credit rose at a healthy 15.07% to Rs 92.03 trillion in the fortnight to December 7, while deposits grew 9.66% to Rs 118.84 trillion. In the previous fortnight ended November 23, credit has risen by 15.09% to Rs 91.32 trillion, while deposits surged 9.43% to Rs 118.13 trillion.
The US markets settled in red territory on Thursday as worries mounted about a possible government shutdown and the Federal Reserve’s latest guidance on interest rates. Asian markets were trading lower on Friday following the overnight market rout on Wall Street. The US Department of Justice also charged two Chinese nationals on Thursday for participating in a global hacking campaign.
Back home, a seven-day rally on the equity Indian markets faded on Thursday, as the larger peers ended their trading session in red terrain, tracking weak global markets. The start of the day was weak, affected by the US think-tank National Bureau of Economic Research’s (NBER) report that the November 2016 demonetisation impacted economic activity in the country in the immediate aftermath, affecting the Gross Domestic Product (GDP) numbers for that fiscal, while the measure's impact had dissipated by the summer of the following year. Domestic sentiments also got hit with the World Bank’s latest report stating that India lost a staggering $86.1 billion, equivalent to over 4% of its GDP, owing to distortions in the power sector in 2016. It added that although India has achieved 100% village electrification earlier this year, 178 million Indians still remain unconnected to the grid as per figures for 2017. Some concerns also came after Crisil expressed concerns on an over 5% dip in sowing for winter crops, which account for the bulk 40% of the nation's annual agricultural output, amid reports of rising rural distress. Crisil also warned that unless the sowing improves from now on, there will be adverse impact on various aspects, including rural consumption. The trade remained lackluster throughout the day, on the back of continuous selling done by the traders. The street was worried with the government think-tank NITI Aayog’s statement that lack of financial literacy, high cost of banking services and excessive regulatory requirements are the key constraints in the financial inclusion goal for India. Adding some concerns, markets regulator Sebi banned Kolkata-based stock broker Guiness Securities (GSL) and 35 entities from securities market till further directions in a case related to non-settlement of client funds and misappropriation of securities. These 35 entities also include GSL's present and former directors. Some concerns also came with a Cibil’s data report showing that banks see rising stress in retail books with the loans against property (LAP), mortgage loans, credit cards spoiling the party. However, traders shrugged off Finance Minister Arun Jaitley’s statement that it will be sound policy measures, which will help alleviate millions from poverty and fulfill the aspirations of the electorate. He said that sound policy will always put economy on track, bringing people out of poverty and give them better quality of life. Finally, the BSE Sensex lost 52.66 points or 0.14% to 36,431.67, while the CNX Nifty was down by 15.60 points or 0.14% to 10,951.70.
