Benchmarks likely to make cautious start

Indian markets ended lower on Tuesday, for second straight session, hit by fag-end sell-off in index heavyweights Reliance Industries and HDFC Bank. Markets were closed on Wednesday for Christmas holiday. Today, the markets are likely to get a cautious start ahead of expiry of futures and options contract of December series later in the day and muted global cues due to the holiday season. There will be some cautiousness with the International Monetary Fund’s (IMF) statement that India should recommit to cutting on debt by bringing down its public sector borrowing requirements and enhance focus on having greater fiscal transparency to help investors make informed economic decisions. However, some support may come with report that government think-tank Niti Aayog member Ramesh Chand made a case for only two slabs under the goods and service tax regime as against the multiple slabs currently, and said rates should be revised annually if required. Traders may take note of report that the goods and services tax (GST) Council will set up a grievance redressal mechanism for taxpayers. Meanwhile, SEBI has asked infrastructure investment trusts (InvITs) to file draft papers with the regulator and exchanges 30 days prior to opening of the issue. There will be some buzz in the NBFC stocks with report that the non-banking financial company (NBFC) sector, which has been affected by a series of default by IL&FS, reported a sharp jump in gross non-performing assets ratio to 6.1 percent in FY19 from 5.3 percent in FY18. Banking stocks will be in focus with the Reserve Bank of India’s (RBI) report that the financial health of state-owned banks should be assessed by their ability to raise resources from markets rather than depending on capital infusion from the government. There will be some reaction in infra stocks with ICRA’s report that the new order inflows for construction companies will improve in 2020 with a huge pipeline of projects in the infrastructure sector.

The US markets remain closed on Wednesday on account of the Christmas holiday. Asian markets are trading mostly higher on Thursday as investors remained optimistic amid easing worries about US-China trade tensions and on hopes of a global economic pickup next year.

Back home, Indian equity markets witnessed heavy losses on Tuesday, with Sensex and Nifty losing around 200 and 50 points, respectively. After a cautious start, markets traded in green for a little duration, taking support with 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, Union Minister Dharmendra Pradhan said the government will soon come out with a white paper on steel industry to make steel industry competitive. But, markets soon turned negative to trade sluggish throughout the session, as International Monetary Fund’s report stated that that India is now in the middle of a significant economic slowdown, urging the government to take immediate policy actions to tackle the current prolonged downturn. Markets extended their losses in the second half of the trading session, amid private report stating that the Centre is staring at Rs 63,200-crore shortfall in goods and services tax (GST) compensation cess for FY20 as revenues slow down. Delay in release of compensation to states has already emerged as a bone of contention between Centre and states. Finally, the BSE Sensex lost 181.40 points or 0.44% to 41,461.26, while the CNX Nifty was down by 48.20 points or 0.39% to 12,214.55.