Markets likely to get cautious start amid mixed global cues

Indian markets magnified their gains for the third consecutive session on Tuesday amidst positive global sentiment and buying at all the sector indices except FMCG and Telecom. Today, markets are likely to get cautious start amid mixed global cues. Investor will be keeping close eye on the Reserve Bank of India's (RBI's) six-member Monetary Policy Committee (MPC) meeting which starts today even as there is no clarity on whether Governor Shaktikanta Das, the chair of the panel, will continue in office after his term ends this month. The RBI Policy decision will be announced on Friday. The December meeting is significant against the backdrop of slowest growth in gross domestic product (GDP) in seven quarters - 5.4 per cent in July-September, much lower than the central bank's projection of 7 per cent. However, robust buying by foreign portfolio investors (FPIs) likely to give a fillip to the sentiment. Foreign institutional investors (FIIs) purchased equities of more than Rs 3,600 crore on December 3. Meanwhile, Finance Minister Nirmala Sitharaman will commence customary pre-Budget consultations with various stakeholders beginning on December 06, 2024. As part of the process, she will meet eminent economists on December 6 to seek their inputs regarding upcoming Budget amid seven-quarter low GDP print of 5.4 per cent recorded in the second quarter of the current financial year. There will be some buzz in banking stocks after the Lok Sabha approved the Banking Laws (Amendment) Bill, 2024, with Union Finance Minister Nirmala Sitharaman outlining measures to bolster investor protection, enhance customer convenience, and improve governance standards in banks. The bill proposes 19 amendments to banking laws. Defence stocks will be in focus with report that the Defence Acquisition Council (DAC) has approved five acquisition proposals worth over Rs 21,772 crore on December 3, in order to ramp up defence preparedness. The DAC granted Acceptance of Necessity (AoN) for the procurement proposals of Water Jet Fast Attack Crafts, Electronic Warfare Suite, Radar Warning and Advanced Light Helicopters, among others. There will be some reaction in edible oil industry stocks with a private report that India's edible oil imports in November jumped to their highest level in four months as refiners raised purchases of palm oil, soyoil and sunflower oil to replenish inventories after robust demand during festival season.

The US markets ended mostly higher on Tuesday as data showed job openings picked up and layoffs eased in October. Asian markets are trading mixed on Wednesday amid the political turmoil in South Korea, a deepening political crisis in France and China's economic woes.

Back home, bulls have further tightened their holding on Dalal Steet as equity benchmarks extended the gains for third consecutive session on Tuesday amid buying in blue-chip stocks like Adani Ports & SEZ, NTPC and SBI and firm trends in global markets. After opening on a positive note, markets gradually advanced throughout the day, as traders took encouragement with Economic Affairs Secretary Ajay Seth’s statement that second quarter GDP growth at 5.4 per cent is lower than the potential but exuded confidence that the second half to be better. He added several high-frequency indicators in the month of October are pointing towards that. Some support also came as rating agency ICRA said it expects sequential revenue growth for India Inc in the December quarter, led by improved rural demand and uptick in government spending, additionally supported by the festival season. Markets added gains in second half of trading session and ended near day’s highs as sentiments remained optimistic as India scrapped the 30-month old windfall profit tax on domestically-produced crude oil and on export of jet fuel (ATF), diesel and petrol following a decline in international oil prices. Traders overlooked a private report that the recent decline in corporate earnings is likely to cast a shadow on the government’s direct-tax receipts and its fiscal position. Tax payment by listed companies was down 7 per cent year-on-year (Y-o-Y) in Q2FY25, their worst showing in the last four years and the first decline in corporate tax in seven quarters. Meanwhile, the RBI is expected to maintain the current benchmark interest rate due to high inflation exceeding the set limit. This decision will be announced on December 6, 2024. Finally, the BSE Sensex rose 597.67 points or 0.74% to 80,845.75, and the CNX Nifty was up by 181.10 points or 0.75% to 24,457.15.