Indian markets to move along global tune with a soft start

The Indian markets rallied in last session coming out of their somber mood and the benchmarks reclaimed their psychological crucial levels, supported by optimistic views of some global agencies. Today, the start is likely to be in red tailing the global sell-off on growth concerns. Traders will be cautious with two Fed officials’ indications that the Federal Reserve will probably start raising interest rates around the middle of next year. On the domestic front, a report from the HSBC Emerging Markets Index (EMI) has stated that manufacturing and services sectors in India expanded at a slower pace than China in September, even as emerging market output touched an 18 month high in the same month. However, there will be some solace with the Department of Industrial Policy and Promotion (DIPP), saying that India will receive the highest-ever inflow of foreign direct investment (FDI) in the current financial year, attracted by the policy reforms announced by the new government. There will be some cheer in the Information technology and IT-enabled services sectors stocks, as the finance ministry has said that companies will be able to transfer or redeploy up to 50% of manpower from existing units to new ones in special economic zones (SEZs) without losing any tax benefits. IT companies will also be in limelight with the official start of the second quarter earnings season by the announcement of results of IT bellwether Infosys. Traders are expecting a nominal growth in revenue with no change in dollar guidance by the company. However, all eyes will be on the management's commentary on business with first non-founder chief executive Vishal Sikka on board.

The US markets slumped again with major averages losing around two percent for the day and ending the session at their worst closing levels in about two months, offsetting the rally that was seen in the previous session. The Asian markets have made a weak start and most of the indices in the region are showing deep cuts amid concern Europe’s slowdown will hobble the world economy and as Hong Kong’s government scrapped talks with protesters.

Back home, snapping three days losing streak, Indian equity benchmarks staged an enthusiastic performance on Thursday, by rallying around one and a half percentage points and breaking lots of psychological levels in their northward rally. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. The rally came mainly after dovish stance of the US Fed and Sharp decline in crude oil prices. Brent oil futures for November delivery tumbled $1.47 or 1.59 percent to hit $90.67 a barrel on the ICE. Some support also came after the International Monetary Fund (IMF), akin to World Bank, raised the India’s growth forecast to 5.6% for 2014 from its earlier estimate of 5.4% and forecasted a higher 6.4% growth in 2015 on the back of renewed confidence in the market due to a series of economic reforms pursued by the new Government. Meanwhile, Paris-based think tank, the Organisation for Economic Cooperation and Development (OECD) said that the Indian economy is projected to see a pickup in growth momentum while most of the other major economies are anticipated to see stable prospects. The readings for the month of August are based on Composite Leading Indicators (CLIs), which are designed to anticipate turning points in economic activity relative to trend. Gains got magnified after European counters made a strong start, while the Asian markets too ended mostly in the green. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Meanwhile, banking shares remained on buyers’ radar after the World Bank said the Indian economy is set to grow by 6.4% in 2015-16 as against 5.6% in 2014-15. Sugar stocks too edged higher as the Food Minister Ram Vilas Paswan has said that government is prepared to extend export subsidy and give additional interest-free loans to clear cane arrears after threats of a shutdown of sugar mills in Uttar Pradesh. Finally, the BSE Sensex surged by 390.49 points or 1.49%, to 26637.28, while the CNX Nifty gained 117.85 points or 1.50% to 7,960.55.