Benchmarks likely to make slightly negative start on Monday

Indian markets ended higher on Friday on the back of a slew of positive developments globally. Today, the start of new week is likely to be flat-to-negative amid mixed cues from Asian peers coupled with weak exports data. As per the government data, India’s exports contracted for the fourth month in a row in November, dipping 0.34% to $25.98 billion, mainly on account of poor shipments of petroleum, gems & jewellery and leather products. Imports too declined by 12.71% to $38.11 billion in November, narrowing the trade deficit to $12.12 billion. Market participants will be eyeing the data on Wholesale Price Index (WPI) inflation for November to be released later in the day. Also, investors will be looking ahead to the 38th Goods and Services Tax (GST) Council meeting to be held on December 18. The Council is expected to deliberate on an alternative mechanism for the compensation cess, and look at ways to boost revenue from indirect taxes. However, some respite may come later in the day with the Reserve Bank of India’s (RBI) data showing that India's services exports rose 5.25% to $17.70 billion in October, while imports remained nearly flat at $10.86 billion. Some support may also come with report that the country's foreign exchange reserves surged by $2.342 billion to touch a life-time high of $453.422 billion in the week to December 6. Traders may take note of NITI Aayog CEO Amitabh Kant’s statement that the series of pathbreaking and ambitious reforms unleashed by the Modi government in the last few years will make India a very competitive and productively-efficient economy in the long run. Meanwhile, beginning the customary pre-Budget consultation exercise from December 16, Finance Minister Nirmala Sitharaman will seek inputs from various stakeholders including industry bodies, farmer organisations and economists for reviving consumption and boosting growth. There will be some buzz in the banking stocks with rating agency Moody’s report that banks may see a spike in bad loans because of stress in the non-banking financial company (NBFC) sector and it warned that the trend of improvement in key bank metrics is likely to reverse or slow. Reality stocks will be in focus with a private report indicating that housing sales are estimated to rise by mere 4% to 2.58 lakh units across seven major cities during this calendar year on subdued demand because of liquidity crunch and overall economic slowdown. There will be some reaction in sugar stocks with report that India exported about 37 lakh tonne of sugar in the 2018-19 marketing year ended September to clear the surplus stock.

The US markets ended slightly higher on Friday as the United States and China announced an initial trade agreement, cooling tensions that have rattled markets. Asian markets are trading mixed on Monday as investors cheered an announced trade agreement between Beijing and Washington over the weekend although jubilation was capped by prevailing scepticism about the deal.

Back home, Indian equity benchmarks continued to flourish in energetic way on the last trading day of the week, with Sensex and Nifty closing higher by around 1% each. After a bullish start, key indices maintained their gaining momentum during the whole day, as Finance Minister Nirmala Sitharaman assured that the Centre will honour GST compensation payment to states but did not say by when the dues will be cleared. Investors also remained positive with Union Minister Rao Inderjit Singh’s statement that Indian economy is resilient and there is no cause for apprehension on decline in GDP with a slew of steps directed at boosting it. He added that the government has been undertaking various measures to boost GDP growth. Extending their gains, key indices settled the session near intraday high points. Optimism remained over the street, even though Moody's Investors Service lowered its 2019 GDP growth forecast for India to 5.6 per cent as slow employment growth weighs on consumption. It expects economic growth to pick up in 2020 and 2021 to 6.6 per cent and 6.7 per cent respectively, but sees the pace of growth remaining lower than past. The street also overlooked sluggish microeconomic data i.e. India's factory output growth which shrunk by 3.8% in October 2019 as competed to expansion of 8.4% in October 2018, while retail inflation based on Consumer Price Index surged to a more than three-year high of 5.54% in November. Finally, the BSE Sensex gained 428.00 points or 1.05% to 41,009.71, while the CNX Nifty was up by 114.90 points or 0.96% to 12,086.70.