Overseas Cues, Rupee Movement To Set Market Trend, Say Experts

Developments around the U.S. government shutdown, a 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 said.

The U.S. government slipped into a partial shutdown following the 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.

Indian equities, however, may be propped up by the latest round of Goods and Services Tax rate cuts and improving macroeconomic fundamentals, some analysts said.

In a Christmas bonanza to the common man, the GST Council 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 percent tax bracket.

The rate rationalisation comes after Prime Minister Narendra Modi, earlier in the week, indicated that the 28 percent slab of GST would only be restricted to select items, such as luxury and sin goods.

Globally, participants would also be monitoring U.S.-China trade relations. The drop in crude oil prices on increased U.S. shale oil output will provide some cushion to net energy importers like India, experts said. The Sensex declined by 220.86 points to end at 35,742.07 over the last week .