Markets likely to start new week in green

Indian markets snapped their eight-day gains on Friday and ended lower amid weak global cues ahead of the release of US jobs data. Today, the start new week is likely to be in green following positive cues from Asian counterparts.  Market participants will be eyeing services PMI data to be out later in the day. Traders will be getting encouragement as Economic Advisory Council member Sanjeev Sanyal said India is capable of sustaining an economic growth of 9 per cent for many years, even as he asserted that a high sustained GDP growth rate is key for the world to achieve the 2030 Sustainable Development Goals (SDGs). Sentiments will get a boost after pulling out money from Indian equities market in the past two months, FPIs made a strong come back in November with a net investment of Rs 36,329 crore on weakening of the US dollar index and positivity about overall macroeconomic trends. Some support will come as the Reserve Bank of India's (RBI) weekly statistical supplement showed India's foreign exchange reserves rose for the third straight week, to $550.14 billion in the week through November 25. For the week ended November 18, the country's reserves were at $547.25 billion. Traders may take note of the SBI Research's latest Ecowrap report stating that even as central banks across several countries continue to hike their interest rates to cap rising inflation, India stands like an oasis in this era of uncertainty. Compared to developed economies like the US, UK and Germany, the report shows India has done markedly better be it cost of living, food prices or even energy costs. Also, all eyes will be on RBI Monetary Policy Committee meeting starting today. The outcome of the meeting will come on December 07. There are expectations that the Reserve Bank of India MPC is likely to announce a 35 basis points (bps) rate hike. There will be some buzz in sugar industry stocks as industry body ISMA said India's sugar production has increased marginally to 47.9 lakh tonnes in the October-November period. Sugar marketing year runs from October to September. Banking stocks will be in focus as the Reserve Bank said Indian banking system's outstanding credit grew by 16.96 per cent for the fortnight ended November 18. It said the bank credit grew to Rs 133.29 lakh crore for the fortnight ended November 18 this year as against Rs 113.96 lakh crore on November 19, 2021. There will be some reaction in coal industry stocks with a private report that domestic coal production went up by 17.13 per cent to 524.20 million tonnes during April-November 2022 as compared 447.54 million tonnes of production recorded during the corresponding period of last year.

The US markets ended mostly in red on Friday as the November payrolls report fueled expectations the Federal Reserve would maintain its path of interest rate hikes to combat inflation. Asian markets are trading mostly in green on Monday as China relaxed virus testing rules in some cities, signaling more easing may come in the nation, which has been under strict Covid-related restrictions for more than two years.

Back home, Indian equity markets snapped an eight-day gaining streak and ended lower by over half percent on Friday amid negative cues from global counterparts and broad-based profit booking in large caps. Key gauges made a negative start and stayed in red for whole day as traders were concerned after data by the Centre for Monitoring Indian Economy (CMIE) showed that the country's unemployment rate rose to a three-month high at 8 per cent during November. The unemployment rate in urban India was higher at 8.96 per cent, while in rural areas, it was at 7.55 per cent. Some concern also came with data from the central bank showing that India's services exports and imports in October fell from the previous month. Services exports in October stood at $25.38 billion, down from $28.03 billion in September, while imports slipped to $13.49 billion from $16.12 billion a month earlier. The frontline indices extended fall in second half of session amid a private report stating that India’s current account deficit (CAD) may shoot up in the July-September quarter (second quarter, or Q2) of 2022-23 (FY23), with the net export ratio touching a fresh nine-year low at 5.89 per cent of gross domestic product (GDP) in Q2. Adding some pessimism, the provisional data available on the NSE showed foreign institutional investors (FIIs) net sold shares worth Rs 1,565.93 crore on December 01. However, markets managed to trim some losses towards the end, taking support from the Finance Ministry’s statement that Goods and Services Tax (GST) revenues rose by 11 per cent to about Rs 1.46 lakh crore in November over the year-ago period. This is the ninth straight month when collections from GST has remained above Rs 1.40 lakh crore. Finally, the BSE Sensex fell 415.69 points or 0.66% to 62,868.50 and the CNX Nifty was down by 116.40 points or 0.62% to 18,696.10.