Markets to get a cautious start; trade deficit data to support

The Indian markets showed a firm trade in last session and the major indices garnered gain of over half a percent on getting some better than expected macro-economic data. Today, the start is likely to be a bit cautious but traders will be getting support from another good economic data of trade deficit. India's current-account deficit shrank to a four-year low to $5.2 billion or 1.2% of gross domestic product (GDP), in the September quarter, sharply lower from the $21 billion deficit recorded a year ago period. Meanwhile, Finance minister P Chidambaram has said that the economy is expected to grow by 5% in 2013-14 and the fiscal and current account deficits would be contained However, there will be some concern too from the economy front, as the output of eight core sector industries contracted by 0.6 percent in October due to poor showing by coal, oil and gas sectors. The output of eight infrastructure industries in April-October was a mere 2.6 percent against 6.8 percent in the same period of the last fiscal. Auto sector is likely to remain under pressure, as after showing some signs of revival in September and October during the festive season, auto sales dipped again in November. On the other hand telecom stocks will keep buzzing, as the Empowered Group of Ministers, headed by Finance Minister P Chidambaram, is scheduled to meet today to discuss M&A norms in the telecom sector.  

The US markets made a soft closing in last session as some better-than-expected economic reports raised speculation the Federal Reserve will soon tighten monetary policy. The Asian markets have made a mixed start and some of the indices are marginally in red on Fed’s tapering concern, however the Japanese market was up by over half a percent to its six month peak, as the yen weakened against the dollar.

Back home, boisterous benchmarks once again showcased an enthusiastic performance on Monday, by rallying over half a percent in their northbound journey on the back of better-than-expected macro-economic data. Frontline indices managed to extend their rally for third straight day and settled above their crucial 6,200 (Nifty) and 20,850 (Sensex) levels as investors took to hefty across the board buying. Sentiments remained up-beat since morning after Indian economy grew at a higher-than expected 4.8 percent in the September quarter, on the back of improvement in farm and construction sector output. Sentiments also got bolstered on report that foreign investors, continuing their buying spree for the third straight month, invested net Rs 8,000 crore in Indian stocks in November. Sentiment of the market bolstered after HSBC Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, snapping its three consecutive months’ declining streak climbed from 49.6 in the previous month to 51.3 in November, mainly led by the rise in new domestic orders. Indicating a slight improvement in operating conditions, this was the first reading above 50.0 recorded since July. However gains remained capped as global cues remained choppy, European markets made a sluggish opening, while Asian equity benchmarks exhibited mixed trade. Back home, some support also came in from currency front where Indian rupee rose to a near two-week high against the dollar, as worries about the economy eased after a private survey showed the country’s manufacturing sector returned to growth last month. Rally in shares of oil marketing companies too aided the sentiments. BPCL, HPCL and IOC all edged higher with the diesel price hike. The government on November 30 hiked diesel prices by 50 paise per litre, while the petrol prices were kept unchanged. Finally, the BSE Sensex surged by 106.08 points or 0.51%, to settle at 20898.01, while the CNX Nifty gained 41.75 points or 0.68% to settle at 6,217.85.