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Overseas cues, rupee movement to set market trend, say experts
New Delhi, Dec 23, 2018 (BSS/PTI) – Developments around the US government
shutdown, trend in crude oil prices and movement of the rupee will set the
tone for the equity markets this week, say experts.
Markets may also witness bouts of volatility ahead of the expiry of
December series derivatives contracts, they added.
The US government slipped into a partial shutdown Saturday following
stalemate over President Donald Trump’s demand for money to build a border
wall.
Meanwhile, reports said Trump has privately discussed the possibility of
firing Federal Reserve Chairman Jerome Powell over his decision to hike
rates. The move, if carried out, is expected to roil the already nervous
global markets and further dent investor sentiment.
However, Indian equities may be propped up by the latest round of GST rate
cuts and improving macroeconomic fundamentals, some analysts said.
“Domestic macro outlook has turned positive in recent times with fall in
oil prices and pick up in industrial production. Additionally, softening of
CPI inflation has opened up scope for RBI to change its stance from
‘Calibrated tightening’ to ‘neutral’ will help in maintaining optimism in
market,” said Vinod Nair, head of research at Geojit Financial Services.
In a Christmas bonanza to the common man, the GST Council Saturday reduced
tax rates on 23 goods and services, including movie tickets, TVs and power
banks, and exempted frozen and preserved vegetables from the levy.
With this, only 28 goods are left in the highest 28 per cent tax bracket.
The rate rationalisation comes after Prime Minister Narendra Modi earlier
in the week indicated that the 28 per cent slab of GST would only be
restricted to select items, such as luxury and sin goods.
Globally, participants would also be monitoring US-China trade relations.
The drop in crude oil prices on increased US shale oil output will provide
some cushion to net energy importers like India, experts said.
Over the last week, the Sensex declined by 220.86 points to end at
35,742.07.
BSS/PTI/HR/1225