Markets likely to get cautious start on Friday

Indian markets tumbled over 1% on Thursday, marking their fourth consecutive session of decline, as global market weakness weighed heavily on investor sentiment. Today, markets are likely to get cautious start as investors anticipating more clear signs of where the economy and markets are headed going into 2025. Also, markets across regions treading cautiously as investors continue to assess the US Federal Reserve's hawkish comments about future policy easing, coupled with a strong GDP print and lower Jobless claims in the US. Also, slight rise in crude oil prices overnight likely to dent sentiments. Oil prices rose slightly on Thursday, supported by falling U.S. crude inventories, though gains were limited after the U.S. Federal Reserve signalled it would slow the pace of interest rate cuts in 2025, a move that could dampen economic growth, reduce fuel demand, and strengthen the dollar. Some pessimism will come as FIIs continued to offload Indian equities, selling shares worth Rs 4,224.92 crore on December 19. However, traders may take note of report that the Pentagon has said the defence relationship between India and the United States is accelerating and advancing in terrific and exciting ways, amidst the transition from the Joe Biden administration to that of President-elect Donald Trump. Ely Ratner, Assistant Secretary of Defence for Indo-Pacific Security Affairs said the US-India defence relationship stands on its own. It is accelerating and advancing in terrific and exciting ways, both as it relates to defence industrial base cooperation as well as operational cooperation across the services. Meanwhile, Sebi decided to extend the deadline for listed companies’ value chain partners to comply with the Business Responsibility and Sustainability Reporting (BRSR) requirements. There will be some buzz in solar equipment manufacturing company’s stocks as CareEdge Ratings asserted that India’s solar equipment manufacturing capacity is poised for healthy growth over the next 2-3 years, entailing a capex of nearly Rs 1 lakh crore. EV stocks will be in focus as Union minister Nitin Gadkari said the Indian electric vehicle market potential is likely to touch Rs 20 trillion and will create around 50 million jobs across the entire EV ecosystem by 2030. Gadkari said estimated electric vehicles finance market size will be around Rs 4 trillion by 2030. There will be some reaction in coal industry stocks as the Coal Ministry stated India’s coal imports during the April-October period of financial year 2024-25 witnessed a major decrease of 3.1 per cent, reaching 149.39 million tonnes (MT) compared to 154.17 MT in the corresponding period of last year. Moreover, International Gemmological IPO (Mainline) will make its debut on the D-Street.

The US markets ended mostly in red on Thursday as investors awaited key U.S. inflation data that could either ease or worsen concerns about price pressures. Asian markets are trading mixed on Friday as investors processed Japan's inflation data and China's interest rate decision.

Back home, Indian equity benchmarks extended losses for the fourth straight session on Thursday due to losses in Banking, Consumer Durables and IT stocks. Markets opened with a downside gap and moved in a narrow range throughout the session as the sharp sell-off was triggered by global market weakness after the US Federal Reserve signaled fewer interest rate cuts in 2025. While the Fed had widely anticipated a 25-basis-point rate cut, its forecast for just two further quarter-percentage-point reductions next year was more conservative than previously expected. The central bank's projection, citing persistent inflation and strength in the US economy, signaled a more cautious approach than investors had hoped for. Some concern also came as Foreign Institutional Investors (FIIs) continued to offload Indian equities, selling shares worth Rs 1,316.81 crore on December 18. Traders overlooked India Ratings and Research’s (Ind-Ra) report in which it has projected the Indian economy to grow at 6.6 per cent in 2025-26, up from 6.4 per cent in the current fiscal year. Ind-Ra believes investments will be a key growth driver for the Indian economy in FY26, like in FY22 and FY24. The Indian economy has experienced a cyclical growth slowdown in the past three quarters, which it expects to reverse from the December quarter. Traders also paid no heed towards the data released by the Central Board of Direct Taxes (CBDT) has showed net direct tax collection grew 16.45 per cent year-on-year to over Rs 15.82 lakh crore till December 17 this fiscal, buoyed by higher advance tax mop-up. Advance tax collection during the period rose 21 per cent to Rs 7.56 lakh crore. Finally, the BSE Sensex fell 964.15 points or 1.20% to 79,218.05, and the CNX Nifty was down by 247.15 points or 1.02% to 23,951.70.