Markets likely to get cautious start amid mixed cues from Asian counterparts

Indian markets extended their winning streak for the fourth consecutive session on Wednesday and ended choppy session in positive territory ahead of the interest rate decision by the Reserve Bank of India. Today, markets are likely to get cautious start amid mixed cues from Asian counterparts. Also, the weekly Nifty options expiry and some anxiety ahead of the RBI Policy outcome tomorrow could weigh on the market sentiment. Some pessimism will come as World Bank International Debt Report noted that India's total external debt has increased by $ 31 billion to $ 646.79 billion in 2023. The report further said that interest payment increased from $ 15.08 billion in 2022 to $ 22.54 billion in 2023. However, some respite may come as the Organisation for Economic Co-operation and Development (OECD) said India will continue to grow at near 7 percent growth rates over the next two years, as strong investment and recovery in farm output help sustain the momentum. OECD in a report said strong investment is the main driver of this robust performance, with accelerating public infrastructure outlays. Foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FIIs) extended their buying on second day as they bought equities of Rs 1,797 crore on December 4. There will be some buzz in banking stocks as data released by the Reserve Bank of India showed that the net liquidity surplus of the banking system rose to touch Rs 1 trillion on Tuesday on the back of government spending. Telecom stocks will be in focus as the Department of Telecommunications (DoT) is pushing for an expansion of the Production Linked Incentive (PLI) scheme for telecom equipment and network products to further localise the manufacturing of key equipment and quickly capture the export demand for 4G and 5G gears. There will be some reaction in coal industry stocks as Union Minister of coal and mines G Kishan Reddy will launch the 11th round of commercial coal mine auctions on December 5. The forthcoming auction offers 27 coal blocks distributed across various states and regions, designed to promote regional economic growth, and create employment opportunities.

The US markets ended higher on Wednesday led by gains in technology shares after firms posted strong earnings and Federal Reserve Chairman Jerome Powell delivered encouraging comments about the health of the economy. Asian markets are trading mixed on Thursday after global stocks hit a record with Jerome Powell’s bullish comments that supported risk assets.

Back home, Indian equity benchmarks ended Wednesday's choppy session marginally in green as investors exercised caution ahead of the RBI's monetary policy announcement 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. After making a slightly positive start, key gauges extended gains led by firm global cues, and foreign institutional investors (FIIs) slowly returning to buying ways, or at least slowing down their continuous selling of Indian equities. According to exchange data, Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 3,664.67 crore. However, in the afternoon deals, key indices erased initial gains and fell sharply as traders turned cautious with Commerce and Industry Minister Piyush Goyal’s statement that the long voyage time due to ships taking longer routes through Cape of Good Hope has impacted global trade, including Indian exports. This has resulted in increased time for goods to reach international markets. But markets recouped losses to end marginally in green as traders took support with a business survey showed growth in India's dominant services sector remained strong in November despite the steepest rise in prices for over a decade, while consistent demand led to a significant rise in business sentiment and record hiring. The HSBC final India Services Purchasing Managers' Index, compiled by S&P Global, stayed almost unchanged at 58.4 in November from 58.5 in October, but was lower than a preliminary estimate of 59.2. Meanwhile, the Lok Sabha has passed the Banking Laws (Amendment) Bill, 2024, which allows bank account holders to have up to four nominees in their accounts. Another proposed change relates to redefining 'substantial interest' for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh, which was fixed almost six decades ago. The Bill piloted by Finance Minister Nirmala Sitharaman was approved by a voice vote. Finally, the BSE Sensex rose 110.58 points or 0.14% to 80,956.33, and the CNX Nifty was up by 10.30 points or 0.04% to 24,467.45.