Markets to get positive start of holiday-shortened week tracking rally in global peers

Indian markets witnessed a sharp correction, ending the week's last trading session down by over 1 per cent each, weighed by selling across the counters. Today, markets are likely to get positive start of a holiday-shortened week tracking rally in global peers amid the lower-than-expected core inflation reading in the US, which worked as a counterbalance to the Fed's hawkishness on rates. Markets will remain closed on Wednesday on account of the Christmas holiday. Some support will come as India has made significant progress in technology and innovation, securing the 49th rank in the Network Readiness Index 2024 (NRI 2024), an improvement of 11 places compared to last year. This year, the country not only climbed the rankings but also improved its overall score to 53.63, reflecting its consistent efforts in advancing technology, research, and digital infrastructure. However, there may be some volatility in the week, amid the Nifty's monthly F&O expiry on Thursday, December 26, 2024. There may be some cautiousness as latest data by the Reserve Bank of India showed that India’s foreign exchange reserves fell by $1.9 billion to $653 billion, around six months low, in the week ended December 13. The reserves fell to their lowest since June 28. Traders may be concerned as Monetary Policy Committee (MPC) Member Nagesh Kumar said the ongoing economic slowdown in the country has become serious enough to demand immediate policy attention. Advocating for 25 basis points (bps) cut in the repo rate during the December MPC meeting, Kumar highlighted the urgent need to address the dual challenges of declining growth and inflationary concerns. Traders may take note of from the 55th Goods and Services Tax (GST) Council meeting resulted in mixed decisions. The Council agreed to refer the proposal for a special levy for disasters to a Group of Ministers (GoM). Additionally, the Council clarified that no GST is payable on penal charges levied and collected by banks and non-banking financial companies (NBFCs) from borrowers for non-compliance with loan terms. There will be some buzz in paper industry stocks as Crisil Ratings said operating margin of writing and printing paper manufacturers is set to contract 400-500 basis points to 15-16 per cent this financial year - following a similar correction last fiscal from the unusually high level of fiscal 2023 - driven by costlier hardwood and softwood and softening realisations. Metal stocks will be in focus as the Indian Steel Association has filed for a safeguard investigation and proposed a potential safeguard duty on imports of non-alloy and alloy steel flat products.   There will be some reaction in auto stocks as data collated by the Society of Indian Automobile Manufacturers (SIAM) showed that India’s passenger vehicle (PV) exports during the first 11 months of 2024 grew by 7.79 per cent to 6,64,648 units while the two-wheeler shipments to overseas countries saw a nearly 22 per cent year-on-year jump to 3,602,151units. Meanwhile, Unimech Aerospace and Manufacturing IPO will open in the mainboard IPO category on December 23 till December 26, 2024.

The US markets ended higher on Friday boosted by a lower-than-expected core inflation reading there. Asian markets are trading in green on Monday after tracking Friday's gains on Wall Street.

Back home, taking their downtrend to the fifth straight session, Indian equity benchmarks experienced a sharp decline on Friday, due to risk aversion in the global markets after the hawkish stance of the US Federal Reserve. Selling pressure was evident across sectors, with Realty, Power and Capital Goods taking the hardest hits. After making a slightly positive start, key gauges traded with volatility in first half as foreign investors continued their selling spree amid the US Federal Reserve’s hawkish stance on interest rate cuts for 2025. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, as they offloaded shares worth Rs 4,224.92 crore, according to exchange data. Markets steadily weakened in late afternoon session amid widespread sectoral weakness. Some concern also came as the central government has proposed a new bill to curb unregulated lending and provide for imprisonment of up to 10 years for violators, besides monetary penalties. With a view to curb unregulated lending activities and protect the interest of consumers, the RBI's Working Group on Digital Lending submitted its report in November 2021. Traders overlooked report that the Central government has released Rs 47,225 crore to the states and union territories under the Smart Cities Mission till November 15 and out of which Rs 44,626 crore has been utilised. Union Minister of State for Housing and Urban Affairs Tokhan Sahu said the work orders have been issued till November 15 in 8,066 crore amounting to Rs 1,64,669 crore, of which 7,352 projects (i.e. 91 per cent of total projects) amounting to Rs 1,47,366 crore have been completed under the mission. Meanwhile, Sebi decided to extend the deadline for listed companies’ value chain partners to comply with the Business Responsibility and Sustainability Reporting (BRSR) requirements. Finally, the BSE Sensex fell 1176.46 points or 1.49% to 78,041.59, and the CNX Nifty was down by 364.20 points or 1.52% to 23,587.50.