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Indian markets scaled new record highs on Friday with Sensex hitting a record high of 71,606 and Nifty hit an all-time high of 21,492 intraday, as the US Fed-driven rally continued on the bourses. Today, markets are likely to get negative start due to profit booking after recent rally amid weakness in Asian counterparts. There will be some cautiousness 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. Traders will be concerned 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. However, some support may come later in the day as the government data showed that India's merchandise trade deficit fell to $20.58 billion in November. It was primarily driven by a fall in imports, by 4.3 per cent, to $54.48 billion as compared to $56.95 billion in the same month last year, while the exports fell less sharply by 2.8 per cent to $33.90 billion from $34.89 billion a year ago. Traders may take note of 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. Besides, the latest data by the Reserve Bank of India (RBI) showed that India's foreign exchange reserves increased by $2.82 billion to $606.86 billion for the week ending December 8. Meanwhile, the finance ministry said the number of GST return filers rose about 65 per cent to 1.13 crore in 5 years till April 2023 as compliance by taxpayers improved. Sugar industry stocks will be in focus as industry body ISMA on Friday said the sudden ban on the use of cane juice for ethanol will have an adverse impact on capacity utilisation of mills, putting at risk their Rs 15,000 crore investment in the last three years to set up plants for green fuel.

The US markets ended mostly higher on Friday after week's dovish pivot by the Federal Reserve. Asian markets are trading mostly in red on Monday ahead of Bank of Japan's monetary policy decision.

Back home, Indian equity benchmarks extended gains and settled at fresh record closing highs for yet another day on Friday led by strong gains in IT, TECK and Metal stocks amid an optimistic trend in global markets. After the initial gap-up opening, the markets remained in a range for most part of the session as traders took encouragement with report that net direct tax collection in the eight months of the current fiscal touched 58.34 per cent of Budget Estimates (BE) at Rs 10.64 lakh crore. The Ministry of Finance said the net tax collection for April-November stood at Rs 10.64 lakh crore, which is 23.4 per cent higher than the corresponding period of last year. Sentiments remained positive with India Ratings’ report stating that the liquidity conditions in the Indian banking system are expected to see substantial improvement from January 2024, owing to a surge in government spending ahead of the vote on account and Foreign Portfolio Investment (FPI) flows in equity markets. It added that the liquidity surplus could touch up to Rs 50,000 crore. Markets witnessed a sharp surge in the final hour of trade as traders took support with the provisional payroll data of Employees’ State Insurance Corporation (ESIC) revealing that 17.28 lakh new employees have been added in the month of October, 2023. Around 23,468 new establishments have been registered and brought under the social security umbrella of the Employees’ State Insurance Corporation in the month of October, 2023, thus ensuring more coverage. Continuous foreign fund inflows into the equity markets also fuelled the rally in stocks. Foreign Institutional Investors (FIIs) bought equities worth Rs 3,570.07 crore on Thursday, according to exchange data. Finally, the BSE Sensex rose 969.55 points or 1.37% to 71,483.75 and the CNX Nifty was up by 273.95 points or 1.29% to 21,456.65.

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