Markets likely to make negative start on first trading day of 2023

Indian equity benchmarks lost their ground in last leg of trade and ended last trading day of 2022 in red terrain. Markets are likely to make negative start on first trading day of 2023. Traders may be cautious as the Finance Ministry’s latest data showed that the government’s fiscal deficit has touched 59 per cent of the full year Budget Estimate at November-end on increased capital expenditure and slow growth in non-tax revenue. However, some respite may come later in the day as the Finance Ministry has said that the GST collections for December 2022 stood at Rs 1,49,507 crore -- 2.5 per cent more than Rs 1,45,867 crore collected in November 2022. On year-on-year basis, GST revenue collected for December 2022 was 15 per cent higher than collections of December 2021, which was Rs 1,29,780 crore. Monthly GST revenues more than Rs 1.4 lakh crore for 10 straight months in a row. Some support may also come in on reports that corporate tax collections exceeded 3 per cent of the GDP after a gap of two years in 2021-22, reflecting overall improvement in profitability of India Inc propelled by increase in demand for goods and services. Traders may take note on report that IT Minister Rajeev Chandrasekhar has said India’s digital prowess will grow in 2023 and over the next five years, driven by technology, start ups, semiconductors, electronics and computing. There may be some buzz in coal related stocks as the country is expected to produce 997.14 million tonnes (MT) of coal in the coming financial year. During 2024-25, the country is expected to produce 1,111.60 MT of coal, which includes 850 MT by Coal India Ltd (CIL), 181.60 MT by captive and others and 80 MT by SCCL. While in FY'26 India's production is expected at 1,288.39 MT, in FY'27 the figure is likely to reach 1,342.80 MT. There may be some reaction in Oil and gas industry related stocks as India's petrol and diesel demand soared in December as increased consumption in agriculture sector helped build on the momentum generated by the festive season. Petrol sales soared 8.6 per cent to 2.76 million tonnes in December, as compared to 2.54 million tonnes of consumption in the same month last year.

On the global front, Asian markets were trading mixed on Monday. The South Korean stock market index Kospi Composite traded with gains in the first session of 2023, while major Japanese and Chinese markets remain closed for the holidays. US markets ended lower on Friday as some traders looked to cash in on Thursday’s strong gains, which largely reflected a substantial rebound by technology stocks.

Back home, Indian equity benchmarks erased all of their gains to end the last trading day of 2022 on a bearish note due to fag-end selling amid weak cues from the European markets. The indices made a positive start, as traders took encouragement with Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that the Indian economy is resilient with financial stability maintained with a well-capitalised banking sector, amid global uncertainties and shocks. Some support also came in as Union Commerce Minister Piyush Goyal said he expects at least two more free trade agreements to be signed up in 2023. He said negotiations are scheduled with the UK, European Union and Canada.  Sentiments remained optimistic with report stating that after remaining above the Reserve Bank's comfort level of 6 per cent for most part of this year, retail inflation is slowly easing, and efforts are likely to continue to further reduce it in the coming months amid global uncertainties. However, a sharp cut in the last half an hour pushed the bulls on the back foot. Traders also turned cautious as data released by the Reserve Bank showed that the country's current account deficit widened to 4.4 per cent of the GDP in the quarter ended September, from 2.2 per cent of GDP during the April-June period, due to higher trade gap. Some anxiety also came with private report stating that the wave of consolidation is likely to hit the shores of the country's fast-growing retail industry next year also as larger players seek to strengthen their footprints, leverage technologies to improve efficiency and expand beyond metros. Meanwhile, the finance ministry said that India's external debt stood at $610.5 billion in the second quarter of 2022-23, down by $2.3 billion from end-June 2022. The external debt to GDP ratio stood at 19.2 per cent as at end-September 2022 as compared to 19.3 per cent at end-June. Finally, the BSE Sensex fell 293.14 points or 0.48% to 60,840.74 and the CNX Nifty was down by 85.70 points or 0.47% to 18,105.30.