Markets likely to get cautious start on Monday

Indian markets ended sharply lower on Friday, dragged by sustained selling in banking, consumer and auto counters. Today, the markets are likely to make cautious start amid concerns over ongoing slowdown in the India’s economy and inflationary risk. Investors will be eyeing macro-economic data to be out later in the week. IHS Markit in its latest report said that India's real GDP growth in 2019-20 fiscal is expected to be slightly below 5 per cent as the impact of stimulus measures will take time to filter through to the economy. Some cautiousness will come with report that reversing their buying trend, foreign portfolio investors (FPI) turned net sellers in December with a net outflow of Rs 244 crore from the capital markets amid subdued economic data. Traders will be also concerned with former Reserve Bank of India (RBI) governor Raghuram Rajan’s statement that India is in the midst of a growth recession with signs of deep malaise in the Indian economy that is being run through extreme centralisation of power in Prime Minister's Office and powerless ministers. However, some support may come with Finance Minister Nirmala Sitharaman’s statement that the government is working on more measures to revive the sagging economy. She added that the government has taken several measures during August and September to boost the economy. Traders may take note of report that industry chamber CII has suggested that the government should reduce the personal income tax rate and slash corporate tax further to 15 percent for all companies over three years to boost demand and propel growth. There will be some buzz in the banking stocks with report that the insurance regulator may allow public sector banks to hold over 10 per cent stake in multiple insurance companies, given that they limit their promoter control to one entity and remain just an investor in others with no say in management decisions.

The US markets ended higher on Friday on much better than expected jobs data. Asian markets are trading mostly in green on Monday, catching some of Wall Street's momentum after surprisingly strong US jobs data although regional gains were capped by concerns about China's economy due to the prolonged Sino-US trade war.

Back home, bears dominated Dalal Street on Friday, with Sensex and Nifty losing over 0.80% each. The start of the day was positive, as Reserve Bank of India’s (RBI) Governor Shaktikanta Das indicated that the government may come up with some countercyclical policy measures on the fiscal side to revive growth. Indices remained in green during early morning deals, taking support with Commerce and Industry Minister Piyush Goyal’s statement the target of Rs 5 lakh crore business through government’s e-marketplace GeM is achievable in less than five years given the huge amount of procurement done via the platform. However, markets failed to hold gains in noon deals and turned negative to settle in red terrain, impacted with Reserve Bank of India’s consumer confidence survey which highlighted that a further drop in consumer confidence in November as households remained pessimistic about jobs and the general economic situation. Weakness persisted over the street, as Federation of Indian Chambers of Commerce and Industry (FICCI) expressed disappointment at the Reserve Bank of India’s (RBI) decision to keep interest rates unchanged and said there is a need for continued action on the policy rate front to boost growth. Finally, the BSE Sensex lost 334.44 points or 0.82% to 40445.15, while the CNX Nifty was down by 96.90 points or 0.81% to 11921.50.