Snapping their three-day gaining streak, Indian equity benchmarks ended lower on Monday due to profit-taking in select frontline stocks on the back of weak Asian and European cues. After the initial downtick, the markets oscillated in a narrow range as traders were anxious with Former Reserve Bank Governor Raghuram Rajan's statement that India will still remain a lower middle country if the growth rate remains at 6 per cent annually without any rise in population by 2047 (Amrit Kaal) and will be reaching the end of the demographic dividend by then. Some cautiousness came in with the commerce ministry's data showing that India's merchandise exports declined by 2.83 per cent to $33.90 billion in November 2023 as compared to $34.89 billion a year ago. Imports also declined to $54.48 billion in the month under consideration, as against $56.95 billion recorded in November 2022. However, the country's trade deficit exhibited a positive trend, narrowing to $20.58 billion in November. However, in late morning deals, key gauges managed to keep their heads above water as traders took some support with former Niti Aayog Vice Chairman Arvind Panagariya's statement that India will become the world's third largest economy by 2026 as its GDP in current dollar terms will reach $5 trillion in that year and further rise to $5.5 trillion in 2027. However, buying proved short-lived as key indices once again slipped into red in second half of trading session, as traders remained pessimistic after economic think tank Global Trade Research Initiative (GTRI) in its latest report has showed that India's exports and imports of goods and services are likely to dip by 2.6 per cent to $1,609 billion in 2023 as against $1,651.9 billion in 2022. However, it noted that robust exports performance in electronic goods, particularly smartphones, and services sectors will help India contain the fall in growth rate of overall trade. Some concern also came as the Engineering Export Promotion Council of India (EEPC) report showed that India's engineering goods exports registered a 3-per cent year-on-year decline in November to $7.85 billion. It said the dip was primarily attributed to the festive season that disrupted operations in major engineering export belts across the country, particularly in northern and western regions. Finally, the BSE Sensex fell 168.66 points or 0.24% to 71,315.09 and the CNX Nifty was down by 38.00 points or 0.18% to 21,418.65.

The US markets ended higher on Monday. Markets continued to benefit from recent upward momentum, which has propelled the Dow to new record highs. The Nasdaq and the S&P 500 have also reached their best levels in nearly two years. However, gains were limited several Fed officials have subsequently pushed back on investor hopes that rate cuts by the central bank are imminent. Later this week, the Commerce Department is due to release its report on personal income and spending in the month of November, which includes readings on inflation said to be preferred by the Fed. On the sectoral front, steel stocks saw substantial strength on the day, resulting in a 3.2 percent spike the NYSE Arca Steel Index. U.S. Steel (X) led the sector higher, skyrocketing by 26.1 percent after announcing an agreement to be acquired by Japan's Nippon Steel for $55.00 per share in cash. Significant strength also emerged among retail stocks, as reflected by the 1.6 percent gain posted by the Dow Jones U.S. Retail Index. The index reached its best closing level in well over a year. Oil producer and pharmaceutical stocks also saw strength on the day, while housing and banking stocks moved to the downside. On the sectoral front, the National Association of Home Builders released a report showing homebuilder sentiment in the U.S. rebounded in December after falling for four consecutive months. The report said the NAHB/Wells Fargo Housing Market Index climbed to 37 in December after falling to an eleven-month low of 34 in November. Street had expected the index to rise to 36.

Crude oil futures ended sharply higher on Monday on rising tensions in the Middle Ease due to recent attacks on ships crossing the Red Sea. The attacks on Red Sea shipping by Houthi militants in Yemen have forced the suspension of some shipments through the Suez Canal, raising supply concerns. According to private reports, five of the world's six largest shipping companies have announced they will not send ships through the Red Sea. British oil giant BP and Taiwan's Evergreen became the latest to suspend transit. Benchmark crude oil futures for January delivery rose $1.04 or 1.46 percent to settle at $72.47 a barrel on the New York Mercantile Exchange. However, Brent crude for February delivery was up by $1.33 or 1.73 percent to settle at $77.95 a barrel on London's Intercontinental Exchange.    

Indian rupee ended lower on Monday in line with a lackluster trend in domestic equity markets. Sentiments were downbeat with the commerce ministry's data showing that India's merchandise exports declined by 2.83 per cent to $33.90 billion in November 2023 as compared to $34.89 billion a year ago. Imports also declined to $54.48 billion in the month under consideration, as against $56.95 billion recorded in November 2022. However, the country's trade deficit exhibited a positive trend, narrowing to $20.58 billion in November. On the global front, the yen stood firm on Monday as the Bank of Japan (BOJ) kicked off a two-day meeting that could be crucial in determining the timing of the end of the central bank's ultra-loose stance on interest rates. The recent burst of risk appetite has given the Australian and New Zealand dollars in particular a leg up, with both nudging towards five-month highs on Monday. Finally, the rupee ended at 83.05 (Provisional), weaker by 2 paise from its previous close of 83.03 on Friday.

The FIIs as per Monday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 37415.53 crore against gross selling of Rs 27178.34 crore, while in the debt segment, the gross purchase was of Rs 3783.19 crore with gross sales of Rs 1191.64 crore. Besides, in the hybrid segment, the gross buying was of Rs 222.74 crore against gross selling of Rs 136.22 crore.

The US markets ended higher on Monday as market participants parsed mounting expectations of interest rate cuts from the Federal Reserve in the coming year and looked ahead to a week of crucial economic data. Asian markets are trading mixed on Tuesday as traders' focus turned on Japan's central bank and whether it might edge further away from its ultra-easy monetary policy. Indian markets snapped their bull momentum and ended marginally lower in the volatile session on Monday as investors booked profit. Today, markets are likely to get cautious start amid mixed cues from Asian peers and sharp rise in crude oil prices. Brent Crude Oil jumped past the $78 per barrel amid escalating tensions in the Middle East due to recent attacks on ships crossing the Red Sea. Foreign fund outflows likely to dent sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FIIs) net sold shares worth Rs 33.51 crore on December 18. However, some support may come as provisional data shared by the Ministry of Finance showed that India's net direct tax collections from April 1 to December 17 (FY23-24) rose 20.7 percent on-year to Rs 13.70 lakh crore. Within overall direct tax collections, corporate tax mop-up amounted to Rs 6.95 lakh crore, while personal income tax and securities transaction tax together came in at Rs 6.73 lakh crore. Traders may take note of report that domestic rating agency Icra revised its FY24 GDP growth forecast to 6.5 per cent from 6.2 per cent earlier. It said the revision is being done because Icra feels the deflation in commodity prices will be sustained and there are expectation of better growth in the October-December period than previous estimates. Besides, minister of state (MoS) for finance Bhagwat Karad said that the Centre will likely achieve the fiscal deficit target of 5.9% of the GDP in the current financial year. The government's fiscal deficit was at 45% of the budget estimate (BE) in the first seven months of the current financial year, aided by robust tax and non-tax receipts. Meanwhile, India and UK have wrapped up the 13th round of negotiations on the Free Trade Agreement after four months of in-person and virtual meetings and the next round will be held in January. Oil & gas stocks will be in focus as the government cut the windfall profit tax on crude oil produced in the country and on exports of diesel. The tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil has been reduced to Rs 1,300 from Rs 5,000 per tonne. There will be some reaction in coal industry stocks as a total of 26 coal mines will be offered in the upcoming round of these three mines will be offered under the Coal Mines (Special Provisions) Act 2015 (CMSP), while the 23 mines under the Mines and Minerals (Development and Regulation) (MMDR) Act 1957. The Union government will launch the ninth round of commercial coal mine auctions on December 20.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Tata Steel is aiming to complete expansion of its Kalinganagar project by December next year.
• Infosys has inaugurated a new state-of-the-art development center at the Mihan-SEZ in Nagpur, Maharashtra.
• TCS has helped SIX, the operator of the Swiss and Spanish financial market infrastructures, modernize its post trade platform for the Swiss market.
• Sun Pharma's subsidiary -- Sun Pharmaceutical Industries Inc. is recalling 96,192 bottles of Liothyronine Sodium Tablets in the US that are used to treat an underactive thyroid.