Markets likely to get a slightly positive start of the holiday truncated week

The Indian markets suffered sharp sell-off in last session mainly on weak global cues. Today, the start of the holiday truncated week is likely to be mildly positive and some recovery too can be expected, as the global markets are slowly stabilizing on sign of some progress in stalled US fiscal cliff talks. Though there is likely to be some cautiousness in the markets, as the Plan panel has warned that persistent policy logjam could pull down the annual average economic growth rate in the 12th Five Year Plan (2012-17) to 5-5.5 percent, from 7.9 percent recorded in the 11th Plan. Also, Chief Economic Advisor Raghuram Rajan has said that more painful decisions are needed to check deficit and diesel price hike and cut in subsidised LPG cylinders are only the first steps. However, the export oriented stocks are likely to keep buzzing, as the Commerce and Industry Minister Anand Sharma after meeting an industry taskforce to chalk out a roadmap for various sectors including manufacturing and services had assured them of export boosting measures on December 24. The PSU stocks too are likely to be in action as the Government is likely to divest stake in Oil India next month, followed by NTPC in February, to achieve its Rs 30,000-crore disinvestment target.

The US markets ended lower on Friday despite some good economic news as the budget deal seemed stuck up midway. House Speaker John Boehner's inability to get the legislation passed led to renewed concerns about whether Congress will be able to reach an agreement. The Asian markets have made a mixed start, and while some are closed today, some of the indices are marginally in red.

Back home, It turned out to be carnage across the Dalal Street on Friday as market-men grew increasingly pessimistic amid increasing uncertainty over the US fiscal cliff. Indian stock markets went through a brutal butchery with benchmark equity indices slipping below their psychological 19,550 (Sensex) and 5,850 (Nifty) levels by the end. However, some relief came in from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s comment 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. But, nervous market participants suffered ruthless across the board profit booking following the disappointing start of European stock markets after US House Republicans late the prior day cancelled their so-called Plan B vote to avert the fiscal cliff before the end of the year. The Asian markets too dampened the sentiments in the domestic markets with shutting shop in the red on Friday as early optimism for progress on the US fiscal cliff was dented after Republican lawmakers canceled a vote on a tax-cut plan. Back home, all the 13 sectoral indices on the BSE faced the brunt of selling pressure with realty counter losing the most by over three percent followed by metal pack which lost over two percent on the back of profit booking after a rally of five straight days as LMEX, a gauge of six metals traded on the London Metal Exchange, dropped 0.85% on Thursday, December 20, 2012. Some amount of pressure also came in from oil and gas sector led by one and a half percent fall in Reliance Industries. Even Information Technology stocks, which staged resilience for almost entire trading session, surrendered to the profit booking in the last hour of trade. Finally, the BSE Sensex shaved off 211.92 points or 1.09% to settle at 19,242.00, while the S&P CNX Nifty plunged by 68.70 points or 1.16% to end at 5,847.70.