Indian benchmarks finished the week on a distressing note as they went on to extend the declining streak for the second successive session as market participants resorted to hefty across the board position squaring. Sentiments remained down-beat on the private report indicating that Cash crunch post demonetisation is expected to slowdown India's GDP growth to 6.5 per cent for the fourth quarter of 2016 and is likely to spill over into the first quarter of 2017. According to the report, cash-dependent sectors (agriculture, trade, real estate, construction and transport) and conspicuous consumption demand (high-end white goods, high-end cars, gold and jewellery and travel) would likely to be 'particularly hit' by demonetisation.  The impact of demonetization was first observed in November's manufacturing PMI, which fell to 52.3 in November from October's 54.4, its biggest month-on-month decline since March 2013. The demand disruption could take its toll on the economy over the next few quarters. Meanwhile, Reserve Bank of India (RBI) is expanding the tools at its disposal to suck out the surge of liquidity in the banking sector following the government's decision to scrap high value notes, the central bank said that the government has raised the limit for issuing market stabilization scheme (MSS) bonds to Rs 6 lakh crore compared to Rs 30,000 crore earlier. Jittery investors lacked conviction to build positions ahead of the release of the US monthly jobs data, a referendum in Italy over its constitution, and the Reserve Bank of India's policy review next week. Also, the GST Council meet is started today, the meeting has become significant in the light of the controversial comments made by West Bengal finance minister Amit Mitra that demonetization - making over 85% of old Rs 500 and Rs 1,000 currency notes illegal - will delay implementation of GST. Finally, the BSE Sensex declined by 329.26 points or 1.24% to 26230.66, while the CNX Nifty dropped 106.10 points or 1.30% to 8,086.80.

The US markets made a mixed closing on Friday, while the Dow industrials finished lower, the S&P 500 and the Nasdaq closing slightly higher as investors digested a weaker-than-expected payroll report. Wall Street has rallied over the past three weeks, with major indexes hitting a series of records since the US presidential election. On the economy front, the US unemployment rate fell much more than expected in November, hitting a nine-year low, as the economy added 178,000 new jobs in the month. Despite the strong drop in the unemployment rate, some details of the report were seen as soft. The payrolls count over the prior two months was revised lower by a cumulative 2,000. And average hourly earnings slumped 0.1% in November after a sharp 0.4% rise in the prior month. This was the first decline since December 2014. Earnings are up at a 2.5% annual rate. In November, private-sector payrolls rose by 156,000. Job growth continued in professional and business services and in health care. Government employment rose by 22,000 in the month. The Nasdaq was up 4.54 points or 0.09 percent to 5,255.65, S&P 500 gained 0.87 points or 0.04 percent to 2,191.95, while the Dow Jones Industrial Average lost 21.51 points or 0.11 percent to 19,170.42.

Crude oil futures extended their rally to post best week in at least five years on Friday, following OPEC's decision to cut crude output to rein in a global glut that has weighed on prices for more than two years. Traders even overlooked oil services firm Baker Hughes report that the number of active U.S. rigs drilling for oil climbed by 3 to 477 rigs this week. Oil drew support from a weak dollar, which slipped against a basket of currencies. Though, some profit-taking ahead of the weekend limited crude's price gains, also there was some pressure with data showing oil output in Russia rising in November to a post-Soviet high. Benchmark crude oil futures for January delivery surged by $0.62 or 1.21 percent to $51.68 on the New York Mercantile Exchange. In London, Brent crude for January delivery ended higher by $0.52 or 0.96 percent at $54.46 on the ICE.

Indian rupee recovered all its initial losses and appreciated against dollar for the fourth straight session on Friday. Dollar sales from exporters also supported the domestic currency. Some support came with Finance Minister Arun Jaitley's statement that demonetisation may impact growth 'for a quarter or so' but this disruption will not last too long and the move along with GST will help create a larger and cleaner economy. On the global front, dollar eased from a 9-1/2 month high against yen, with investors cautious ahead of a looming US jobs report that could set the market's tone in coming days. Finally, the rupee ended at 68.21, 13 paise stronger from its previous close of 68.34 on Thursday.

.

The FIIs as per Friday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3503.91 crore against gross sell of Rs 3904.95 crore, while in the debt segment, the gross purchase was of Rs 1061.97 crore with gross sales of Rs 2072.42 crore.

The US markets closed mostly flat in last session after a choppy trade, following the release of the Labor Department's closely watched monthly employment report for November, where employment increased more than expected and the unemployment rate fell to its lowest level since hitting a matching rate in August of 2007. The Asian markets have made mostly a lower start with some of the indices trading lower by over half a percent weighed down by mixed U.S. jobs data. Traders in the region were also concerned with the failure of Italy's referendum on constitutional reform. The Indian markets suffered sharp sell-off in the last session on weak global cues and on concern about the demonetization impact on the economy. Today, the start of the crucial week is likely to remain somber on weak global cues and the traders will first be reacting to the news of GST tax reforms from next April suffering a major setback after a two-day meeting of the centre with state officials ended without the resolution of a deadlock on who would administer the tax. Finance Minister Arun Jaitley has said that “Discussions on dual control of assessees remain inconclusive". They will be carried forward in the next GST Council meeting, which is slated to meet again on December 11 and 12. The Finance Minister though expressed optimism on the rollout date and said, "We are still targeting April 1, 2017 for roll out of GST". All eyes will be on RBI monetary policy scheduled later in the week, in the backdrop of a severe contractionary shock after the demonetization announcement. Meanwhile, the industry body Assocham has asked the government to jack up its public expenditure in 2016-17, arguing that private consumption will take a "significant hit" at least in the next two quarters following demonetization. There will be some buzz in the steel stocks, as the government has extended the minimum import price (MIP) for 19 colour-coated and galvanised steel products till February 4, 2017, without tweaking the price range.

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

Nifty Top volumes 

• Mahindra and Mahindra's South Korean subsidiary SsangYong Motor, has sold a total of 13,728 units in November 2016 - 9,475 units in domestic sales and 4,253 in exports.
• ICICI Bank will support women beneficiaries through its programme for Self Help Group in Odisha.
• Bajaj Auto has registered a fall of 13% in total sales to 2,69,948 units in November 2016 against 3,09,673 units in November 2015.
• Tata Motors' passenger and commercial vehicle total sales (including exports) in November 2016 stood at 38,900 vehicles, flat over 38,918 vehicles sold in November 2015.
• Coal India has reported provisional production of 50.00 million tonnes in November 2016, as against a target of 53.85 million tonnes.