Markets to get a cautious start of week’s last trading session

The Indian markets closed marginally lower in last session, though there was a good recovery attempt in the last that helped markets recoup most of their losses. Today, the start is likely to remain cautious on mixed global cues. Markets are likely to get some support as the Planning Commission Deputy Chairman Montek Singh Ahluwalia has said that Government is doing a lot to push growth but the impact of its efforts will be felt in the second half of the fiscal when the expansion rate will show some improvement. Though, there is a weak economic report too, retail inflation, based on Consumer Price Index (CPI) for agricultural  and rural labourers increased in November due to increase in prices of food items. There is likely to be buzz in the market with MCX Stock Exchange (MCX-SX) receiving the final go-ahead from regulator Securities and Exchange Board of India for going live in new product segments such as equity, wholesale debt (bonds) and interest rate derivatives. Stocks of services sector are likely to see some action, as India and Asean have extended their free trade pact to include services and investment.

The US markets ended higher on Thursday amid ongoing budget deal talks; there was some sense of relief after House Speaker John Boehner said he would continue to work on a solution to avert the fiscal cliff. There were some positive economic news, the existing home sales and pace of GDP growth in the third quarter improved that supported the markets. Most of the Asian markets have made a soft start, Japanese market after a strong start betting on hopes of additional monetary easing from the Bank of Japan has given up its gains.

Back home, Indian equity indices ended the session slightly in the negative as investors preferred to book profits after two consecutive sessions of gains amid subdued global set up. Moreover, the frontline indices traded choppy throughout the day as investors adopted cautious approach for most part of the day’s trade ahead of Gujarat assembly election outcomes. Sentiments also remained dampened after stock market regulator Securities & Exchange Board of India (SEBI) on December 19, 2012, raised the base minimum capital (BMC) for stock brokers holding registration as stock-broker in the cash segment. SEBI also introduced BMC for members holding registration as trading member in any derivative segment. Selling got intensified in the first half and both the gauges tumbled below their crucial 5,900 (Nifty) and 19,400 (Sensex) levels touching intraday lows as global risk appetite remained weak with deteriorating federal budget negotiations in US fueled concern that automatic tax increases and spending cuts will be triggered. But, some amount of recovery in the domestic benchmarks was witnessed in the late trade following revival in European counters which turned positive, after a subdued start on Thursday, with UK engineering group Weir among the main gainers as it benefited from a broker upgrade. Moreover, recovery in Asian markets too supported the sentiments. Back home, the markets pared most of their losses with Sensex and Nifty re-conquering psychological 19,450 and 5,150 levels on value-buying in metal and other defensive sectors such as pharmaceuticals and FMCG. Moreover, traders also got some support with government’s stand of stable tax regime and stating that it was banking on better compliance to boost revenues. However, the recovery was not enough to bring the indices back into green as risk appetite remained frail after assembly election where Gujarat Chief Minister Narendra Modi looked set for a third consecutive victory, even as two top Congress leaders in the state bit the dust. Further, BJP's decisive win in Gujarat was on expected lines, and to a large extent, the Congress was expected to gain from the anti-incumbency wave in Himachal. Finally, the BSE Sensex lost 22.08 points or 0.11% to settle at 19,453.92, while the S&P CNX Nifty declined by 13.20 points or 0.22% to end at 5,916.40.