Benchmarks likely to make cautious start

Indian markets ended higher on Thursday led by a surge in metals and infrastructure stocks, amid expansion in manufacturing activity to a 7-month high in December. Today, the markets are likely to make a cautious start amid reports of surge in crude oil prices. As per reports, oil prices jumped more than $1 on Friday after a US airstrike killed key Iranian and Iraqi military personnel, raising concerns that escalating Middle East tensions may disrupt oil supplies. There will be some cautiousness with another private report indicating that India's real GDP growth would weaken further in Q3 of the financial year due to slow economic activity in the first two months of the second half and the GDP for FY20 could be around 4.5%. Besides, think-tank Centre for Monitoring Indian Economy (CMIE) stated that India's unemployment rate increased to 7.7% in December, slightly higher than 7.48% reported in the previous month. However, some support may come later in the day with report that the Reserve Bank of India (RBI) on January 6 will carry a special simultaneous open market operation to buy and sell government bonds of Rs 10,000 crore each. On a review of the current liquidity and market situation and an assessment of the evolving financial conditions, the RBI has decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO). Traders may take note of the RBI’s report that banks' credit and deposits grew by 7.10 percent and 10.09 percent to Rs 99.47 lakh crore and Rs 130.08 lakh crore in the fortnight ended December 20. There will be some buzz in the infrastructure stocks as ratings agency ICRA maintained a cautious stance on the road sector, even as the government has decided to invest Rs 102 lakh crore from fiscal 2020-2025 in modernising infrastructure. There will be some reaction in sugar stocks with Indian Sugar Mills Association’s (ISMA) statement that the country’s sugar production has fallen sharply by 30.22% to 7.79 million tonne in the first three months of current marketing year ending September, but ex-mill prices have remained stable so far, helping mills clear cane payment to farmers on time.

The US markets ended at record highs on Thursday as traders continue to express optimism about the potential impact of a phase one US-China trade deal. Asian markets are trading mostly in green on Friday following overnight gains on Wall Street.

Back home, Thursday turned out to be a fabulous day for Indian markets, as Sensex & Nifty logged gains of around 300 & 100 points, respectively. The start of the day was firm, aided with the commerce & industry ministry data showing that foreign direct investment into India grew 15% to $26 billion during the first half of the current financial year. Inflow of FDI during April-September of 2018-19 stood at $22.66 billion. Adding more comfort, Goods & Services Tax revenue collection remained above Rs 1 lakh crore mark for the second month in a row with December mop-up rising to Rs 1.03 lakh crore as compared to the year-ago period. Bulls held their tight grip over the markets for the whole day, after Indian manufacturing industry saw a solid rise in their activities in the month of December 2019, on account of rising new orders and output. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index surged to 52.7 in December from 51.2 in November. Traders remained positive with a private report stating that private equity investments in the country are expected to grow 15-20 per cent in 2020 as investors pin hopes on the country's long growth potential after a blockbuster year when credit flow through regular channels turned slow. Finally, the BSE Sensex gained 320.62 points or 0.78% to 41,626.64, while the CNX Nifty was up by 99.70 points or 0.82% to 12,282.20.