Markets to open marginally in red on Tuesday

Indian markets ended a range-bound session slightly lower on Monday dragged by energy and FMCG stocks. Today, the markets are likely to make flat-to-negative start as investors are likely to avoid making big bets ahead of the Christmas holiday and the expiration of near-month derivative contracts. There will be some cautiousness on report that the International Monetary Fund (IMF) has retained India’s economic growth forecast at 6.1 per cent for FY20, but said risks to the outlook are tilted to downward side. It added that India needs to consolidate its finances by curbing expenditure and boosting taxes to trim its debt. However, some support may come with report that to protect consumers interest, the Reserve Bank of India (RBI) has said that on a peer-to-peer lending (P2P) platform the permissible exposure of a lender to all borrowers should not exceed Rs 50 lakh at any given point of time. Traders may take note of Industry chamber PHDCCI’s statement that the definition of micro, small and medium enterprises (MSMEs) on the basis of turnover will help in promoting the ease of doing business as the process of identification and dealings with such entities will become simpler and faster. Besides, the RBI has purchased Rs 10,000 crore worth of long-term government securities and sold Rs 6,825 crore of four short-term securities through the special open market operations (OMOs). There will be some buzz in the metal socks with Union minister Dharmendra Pradhan’s statement that the government will soon come out with a white paper on steel industry that will focus on ways to reduce the tax-related expenditure in the sector and make it competitive. There will be some reaction in power stocks with report that the Power Ministry has scrapped the auction to procure 2,500 MW electricity for medium term (three years) under a scheme to provide relief to thermal power plants plagued by short coal supplies.

The US markets ended higher on Monday on the heels of report that China's Finance Ministry has announced plans to lower tariffs on a range of products, including frozen pork, pharmaceuticals and some high-tech components. Asian markets are trading mixed on Tuesday despite overnight gains on Wall Street.

Back home, Indian equity bourses paused record closing rally on Monday, with Sensex & Nifty closing on lower note. After a weak beginning of the day, indices remained highly volatile, impacted with Assocham president Niranjan Hiranandani’s statement that the economy is facing a liquidity problem and demand recession, and it requires measures to lift consumption, including reduction in goods and services tax and personal income tax and improved credit flow, to revive. Adding more worries, International Monetary Fund chief economist Gita Gopinath said that while it was anticipated that India’s growth will slow down, the current numbers come as a shocker with a sharp decline in both investment and consumption. In the second half of the trading session, losses got intensive, amid a private report stating that after taking a big hit from the falling rate of economic growth in 2019, the job market may remain muted in the New Year as well in terms of workforce expansion and salary hikes as more and more companies are expected to prefer up-skilling of existing staff rather than hiring new ones. However, key indices staged some recovery at the end to come off day’s low points, with reports that India's forex reserves continued on the northward trajectory, rising to a new record of $454.492 billion on the back of a $1.07 billion accretion for the week ended December 13. Finally, the BSE Sensex lost 38.88 points or 0.09% to 41,642.66, while the CNX Nifty was down by 9.05 points or 0.07% to 12,262.75.