Pre Session-Cautious opening on the cards for Sensex amidst GST uncertainty
21/12/2015 08:23
The key domestic benchmarks could witness a gap down opening on Monday as traders fret over the uncertainty surrounding the crucial Goods and Services Tax (GST) bill which remains stuck in the Parliament due to opposition uproar. With the Winter Session of Parliament ending this Wednesday, there is little likelihood of the bill being passed in the near-term in the Upper House of Parliament where the ruling NDA lacks a majority, delaying a key fiscal reform in Asia’s third biggest economy, souring investor mood. Meanwhile, Former finance minister P Chidambaram addressed the concerns of the Congress party over GST, stressing that a delayed GST was better than the present version of the bill which he termed as “flawed”, raising doubts over its implementation from April 1, 2016. Weakness in the CNX Nifty Index futures for December delivery which fell 0.16 per cent or 12.50 points at 7,761.5 at 10:12 am Singapore time, signals that Dalal Street may open lower today. Even with the Fed decision out of the way, volatility may rule domestic bourses in the holiday-shortened week as concerns over the domestic economy weigh. The government last week cut the growth estimate for the country’s economy to 7-7.5 per cent in FY 2015-16 from 8.1-8.5 per cent earlier amidst weakness in exports, sluggish agriculture sector and slow private investment. A spike in retail inflation to a five-month high of 5.41 per cent in November 2015 from October’s 5 per cent has also dashed hopes of a near-term interest rate cut by the Reserve Bank of India (RBI). Movement of the rupee against the dollar, sentiment in global markets and crude oil prices may also dictate the domestic market trend this week. The 30-share Sensex on Friday shed 1.10 per cent or 284.56 points to end at 25,519.22 as the centre slashed the economy’s growth forecast for the ongoing fiscal but the Sensex logged the biggest weekly gain in over two months, up nearly 2 per cent after the US Federal Reserve raised interest rates for the first time in almost a decade but signaled a gradual pace of tightening, bringing an end to a prolonged period of uncertainty surrounding the US rate outlook. The Fed exited it’s near-zero interest rate era, raising the target of its federal funds rate to 0.25 per cent to 0.5 per cent, from 0 to 0.25 per cent previously.
Asian stocks were trading mixed today as oil extended a steep rout while fears over faltering global growth in the aftermath of the Fed rate hike gripped investors. China’s Shanghai Composite posted modest gains led by a rally in property developers after home prices advanced in more cities in November. Hang Seng also rose but Japan’s Nikkei 225 tumbled 1.7 per cent as a surging yen curbed the appeal of exporter stocks. Wall Street slid to a two-month low on Friday amidst worries over a slowing world economy due to a China slowdown and a continued commodity rout. The Dow Jones Industrial Average shed 2.10 per cent, the Nasdaq Composite lost 1.59 per cent while S&P 500 plunged 1.58 per cent on Friday.
21/12/2015 08:23
The key domestic benchmarks could witness a gap down opening on Monday as traders fret over the uncertainty surrounding the crucial Goods and Services Tax (GST) bill which remains stuck in the Parliament due to opposition uproar. With the Winter Session of Parliament ending this Wednesday, there is little likelihood of the bill being passed in the near-term in the Upper House of Parliament where the ruling NDA lacks a majority, delaying a key fiscal reform in Asia’s third biggest economy, souring investor mood. Meanwhile, Former finance minister P Chidambaram addressed the concerns of the Congress party over GST, stressing that a delayed GST was better than the present version of the bill which he termed as “flawed”, raising doubts over its implementation from April 1, 2016. Weakness in the CNX Nifty Index futures for December delivery which fell 0.16 per cent or 12.50 points at 7,761.5 at 10:12 am Singapore time, signals that Dalal Street may open lower today. Even with the Fed decision out of the way, volatility may rule domestic bourses in the holiday-shortened week as concerns over the domestic economy weigh. The government last week cut the growth estimate for the country’s economy to 7-7.5 per cent in FY 2015-16 from 8.1-8.5 per cent earlier amidst weakness in exports, sluggish agriculture sector and slow private investment. A spike in retail inflation to a five-month high of 5.41 per cent in November 2015 from October’s 5 per cent has also dashed hopes of a near-term interest rate cut by the Reserve Bank of India (RBI). Movement of the rupee against the dollar, sentiment in global markets and crude oil prices may also dictate the domestic market trend this week. The 30-share Sensex on Friday shed 1.10 per cent or 284.56 points to end at 25,519.22 as the centre slashed the economy’s growth forecast for the ongoing fiscal but the Sensex logged the biggest weekly gain in over two months, up nearly 2 per cent after the US Federal Reserve raised interest rates for the first time in almost a decade but signaled a gradual pace of tightening, bringing an end to a prolonged period of uncertainty surrounding the US rate outlook. The Fed exited it’s near-zero interest rate era, raising the target of its federal funds rate to 0.25 per cent to 0.5 per cent, from 0 to 0.25 per cent previously.
Asian stocks were trading mixed today as oil extended a steep rout while fears over faltering global growth in the aftermath of the Fed rate hike gripped investors. China’s Shanghai Composite posted modest gains led by a rally in property developers after home prices advanced in more cities in November. Hang Seng also rose but Japan’s Nikkei 225 tumbled 1.7 per cent as a surging yen curbed the appeal of exporter stocks. Wall Street slid to a two-month low on Friday amidst worries over a slowing world economy due to a China slowdown and a continued commodity rout. The Dow Jones Industrial Average shed 2.10 per cent, the Nasdaq Composite lost 1.59 per cent while S&P 500 plunged 1.58 per cent on Friday.
