Markets likely to make cautious start of new week

Indian markets ended lower on Friday as heavyweight auto, banking and IT stocks paced the declines amid concerns about India's economy. Today, the markets are likely to make a cautious start ahead of Manufacturing PMI data to be out later in the day. Investors will also be eyeing Services PMI data and outcome of the Reserve Bank of India’s (RBI) policy meeting to be release later in the week. As per a private report said RBI may cut interest rates for the sixth straight time to support growth. There will be some cautiousness with the government data showing that the Gross Domestic Product (GDP) growth for the second quarter (July-September) of the financial year 2019-20 dropped to 4.5%, the weakest pace in more than six years, due to weak consumer demand, slowing factory activities and negative impacts of the prolonged monsoon. Also, output of eight core infrastructure industries contracted by 5.8% in October, indicating the severity of economic slowdown. Though, some respite may come later in the day with Finance minister Nirmala Sitharaman’s statement that several significant steps in structural reforms have been taken in the past few months and responses/interventions addressing the needs of the economy will continue, indicating more relief measures could be on the anvil if so needed. Some support may also come with report that festive season demand helped the government collect Rs 1.03 lakh crore in goods and services tax (GST) in the month of November, up 6% over the same month last year. During the month of November, the GST collection on domestic transactions witnessed a growth of 12%, highest during the year.  Traders may take note of Union Minister Dharmendra Pradhan’s statement that the current economic slowdown is temporary and a result of the ongoing global trade war between the US and China. There will be some buzz in the infra stocks with the finance minister’s statement that the Union government will unveil a series of infrastructure projects this month as part of a plan to invest Rs 100 trillion ($1.39 trillion) in the sector over the next five years, in a push to improve the country's economy. There will be some reaction in telecom stocks as telecom operators Bharti Airtel and Vodafone Idea decided to raise their tariff plans from December. The auto sector stocks will also be in action, reacting to their monthly sales numbers.

The US markets ended in red on Friday as trade tensions resurfaced after China warned it would retaliate against President Donald Trump’s decision to ratify a bill backing protesters in Hong Kong. Asian markets are trading mostly higher on Monday as data releases showed Chinese factory activity springing a positive surprise in November.

Back home, snapping their two-day record-setting streak, Indian equity benchmarks ended Friday’s trade on a pessimistic note with losses of more than half a percent, as investors were cautious ahead of the release of the Gross Domestic Product (GDP) data for the September quarter slated for later in the day. Markets traded in negative note since the beginning, amid discouraging cues from global peers. Sentiments remained dampened with CRISIL’s report that for states, balancing the fiscal math while continuing to spend on infrastructure capital expenditure (capex) will be challenging. Selling got intensified in the afternoon session, as sentiments on the street weakened further with a private report that India's economy probably expanded at its weakest pace in more than six years in the quarter to September, as consumer demand and private investment weakened further and a global slowdown hit exports. Traders also took a note of chief Economic Adviser K V Subramanian’s statement that the cut in corporate tax rate was required to boost investments as the virtual cycle that spurs growth in the economy has not been functioning as expected for the last few quarters. Finally, the BSE Sensex lost 336.36 points or 0.82% to 40,793.81, while the CNX Nifty was down by 95.10 points or 0.78% to 12,056.05.