Markets likely to get slightly negative start on Tuesday

Indian markets ended almost flat after a volatile session on Monday amid weak economic numbers, lower than expected auto sales and profit booking. Today, the start of session is likely to be flat-to-negative tracking weakness in global markets. Investors will be eyeing the Reserve Bank of India’s (RBI) fifth monetary policy meet of the financial year 2019-20 (FY20) that begins today, while the decision will be out on December 5. There are expectation that RBI may cut repo rate by another 25 bps (basis points) to spur economic growth after official data showed India's gross domestic product (GDP) collapsed to 4.5% in the July-September quarter, the first time it’s been below 5% since 2013. There will be some cautiousness with a private report indicating that with the government trying to revive a stuttering economy, the Goods and Services Tax (GST) mop-up for November is expected to provide some respite, but it added that an improvement in GST collections may not be a solution to all the worries of the government. However, some support may come later in the day with Finance Minister Nirmala Sitharaman’s statement that gross direct tax collection increased by 5% till November, and she allayed fears of corporate tax reduction impacting revenue collection. Traders may take note of Commerce and Industry Minister Piyush Goyal’s statement that the value of India's overall exports rose about 8% to $538.07 billion during 2018-19. Besides, the government aims to increase the country's export of merchandise and services to $900 billion in 2019-20 and raise India's share in world exports (goods and services) to 3.5%. Telecom stocks will be in focus as the proposed tariff hike plan will come into effect from today. The Cellular Operators Association of India (COAI) said that the Indian telecom industry has taken first step towards improving its financial health by hiking tariffs for the first time since 2016 - a much needed move for the telcos to cover adjusted gross revenue (AGR) dues within 90 days. There will be some reaction in reality stocks with a private report that loans worth $14 billion (about Rs 1,000 crore) provided to real estate firms by banks, NBFCs and housing finance companies (HFCs) are under severe stress and facing issues of debt servicing.

The US markets ended lower on Monday, hit by a downbeat report on the manufacturing sector and a fresh flare-up in trade tensions. Asian markets are trading mostly in red on Tuesday after US President Donald Trump stunned markets with tariffs against Brazil and Argentina, recharging fears about global trade tensions.

Back home, Indian equity bourses settled the volatile day near their neutral lines on Monday. The start of the day was positive, as Goods and Services Tax collection witnessed an impressive recovery with a positive growth of 6% to Rs 1.03 lakh crore in November 2019 over November 2018 collection. Some support also came 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. But, indices failed to hold early gains & turned volatile, even though India's manufacturing activity made a marginal improvement, surging to 51.2 in November from 50.6 in October. Sentiments got hampered, after rating agency CRISIL sharply cut its growth forecast for the current financial year to 5.1 per cent from an earlier estimate of 6.3 per cent. The street also remained worried, amid a private report stating that India's economic growth is expected to remain subdued in near future as the slowdown has deepened and is likely to remain extended for a longer duration than previously anticipated. Finally, the BSE Sensex gained 8.36 points or 0.02% to 40,802.17, while the CNX Nifty was down by 7.85 points or 0.07% to 12,048.20.