Investors' exuberance over the favourable global cues is set to be tampered by the worries over the state of the economy back home. As such, they may turn cautious as the indices scale fresh all-time highs.
Yesterday, Moody’s lowered India’s FY20 GDP forecast to 4.9 per cent from 5.8 per cent, citing weak household consumption. The rating agency said that slower economic growth over the past few quarters would dent the debt repayment capacity of households and hurt retail loan quality.
This came shortly after data showed that the WPI-based inflation in November rose 0.58 per cent, from 0.16 per cent in October, driven by a food inflation rate which was a 71-month high.
However, market participants will also factor in RBI Governor Shaktikanta Das' reassurance that there is more scope for rate cuts.
In company specific news, the world's largest steelmaker ArcelorMittal yesterday closed a Rs 42,000 crore deal with the lenders of Essar Steel along with Nippon Steel.
These apart, the rupee's movement against the US dollar, foreign fund flow, and the oil price movement will also impact investors' risk-taking appetite.
In the US, Wall Street stocks notched record closing highs on Monday as cooling trade tensions between Washington and Beijing and upbeat economic data from China boosted investor sentiment. The Dow Jones Industrial Average rose 0.36 per cent, the S&P 500 gained 0.7 per cent, and the Nasdaq Composite added 0.9 per cent.
Asian shares gained on Tuesday. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent. Japan's Nikkei rose half a percent to its highest in more than year, and Australia's ASX 200 eked a tiny extension to Monday's big gains. The SGX Nifty suggested a positive start for the domestic indices.
In commodities, brent crude held steady at $65.29 per barrel, after climbing overnight
Back home, Indian equity indices ended a lackluster trade near day's low on Monday, as investors booked profit post stellar gains seen on Friday. The benchmark S&P BSE Sensex settled 71 points lower at 40,939 level. On the NSE, the broader Nifty50 index held the 12,000-mark, at 12,054 level, down 33 points.
Going forward, analysts say that Monday's fall in Nifty may see some more correction till 12,044 followed by a bounce back. So, if it dips till those levels it will be a buying opportunity for the target of 12,150 with a stop loss of 12,000.
In the end, here's a trading idea for you by Anand Rathi Shares and Stock Brokers who recommend buying TCS at current levels for the target of Rs 2,210 with stop-loss at Rs 2,070.