Cautious start on cards on the last trading day of the year

The Indian markets surged in last session on hopes that US will reach a budget deal and tailing the jubilant Asian peers. Today, on the last trading day of the calendar year, markets are likely to make a cautious start as there is still not anything concrete from the US. Senate leaders on Sunday failed to produce deal with just hours to go before large tax increases and spending cuts and there is likely to be another meeting of US Congress in the evening. Meanwhile, there is likely to be buzz in the India Inc, as the corporate affairs ministry is setting up a new intelligence unit that will delve into 'data mining' from all possible sources to detect any wrongdoings by the companies and their promoters at the earliest possible stage. The banking stocks too are likely to keep buzzing as one of the Deputy Governor's of RBI, cautioning banks charging high prices on products offered to customers has said that a new set of guidelines would be announced soon. The retail sector stocks too will be in limelight as the government is likely to clear IKEA’s proposal to open cafeterias at its proposed mega retail outlet in a FIPB meeting, making rules a bit more liberal for single brand retailers.

The US markets made a soft closing on Friday though the economy news remained positive but the traders were concerned about the looming deadline to the "fiscal cliff". The Asian markets are showing a mixed trend, though some of them are shut and few will be trading only till half day. Chinese market was trading up after nation’s manufacturing unexpectedly expanded at the fastest pace in 19 months in December, giving a sense that the economy is slowly gaining traction.

Back home, bulls retaliated with vigor on first day of new month F&O series, after declining over a percent, thanks to encouraging Asian leads which provided the required fillip for benchmark indices to garner over half a percent gains as indices got an unexpected boost in dying moments of trade, yanking them from the lowest point in the session to the highest point in no time. The important psychological 5,880 (Nifty) and 19,350 (Sensex) levels proved as strong supports for the key gauges as the indices spurted in the dying hours of trade from those levels and re-conquered the 5,900 (Nifty) and 19,450 (Sensex) bastions in the end. The rally in the Indian equity markets came in mainly on the back of rise in oil and gas space which rose about two and a half percent as stocks of public sector undertakings (PSU) oil marketing companies (OMCs) like BPCL, HPCL and IOC edged higher on reports that the government is looking at the option of increasing diesel and kerosene prices by Rs 10 per litre in phases. Sentiments also got some boost after Oil exploration firms like, Oil India, ONGC and Cairn India rose as US crude oil futures headed for biggest weekly gain since August 2012, as US lawmakers scheduled talks aimed at averting tax increases and spending cuts in United States. The surprise upsurge in sentiments also came from rally in Asian markets as all the regional peers ended higher on hopes of quick resolution to US fiscal cliff as lawmakers initiated talks in Washington. Back home, markets mood also got some boost after Finance Minister P Chidambaram expressed optimism that the Indian economy will continue to grow at a healthy rate even as the global economies face recession. Software pack too supported the rally, surging by about a percent on hopes that the US lawmakers will try to reach a deal to break the budget impasse before the end of the year. Metal stocks too aided the sentiments as scrips like Hindalco, Sterlite Industries, NMDC and SAIL edged higher as LMEX, a gauge of six metals traded on the London Metal Exchange gained 1 percent on December 27, 2012. Auto space too made a positive close as stocks like Maruti Suzuki, Hero MotoCorp and Bajaj Auto surged ahead of unveiling December sales figures starting January 1, 2013. Finally, the BSE Sensex gained 121.04 points or 0.63% to settle at 19,444.84, while the S&P CNX Nifty rose by 38.25 points or 0.65% to end at 5,908.35.