Markets likely to get a cautious but positive start

The Indian markets made a bounce back in second half, especially in the final hours of the trade in last session, to end higher. Today, the start is likely to be cautious, though traders will be reacting positively to the report that the September retail inflation declined to 6.46 percent, lowest since the new series of Consumer Price Index was released in January 2012 and much below the RBI target of 8 percent by January 2015. However, there will be some concern too, with RBI governor Raghuram Rajan stating that Indian economic recovery is still uneven, although he has exuded optimism that the country will be “solidly” in the 5 percent growth bracket during the course of this fiscal and accelerate further in the next financial year. There will be some buzz in the markets with the report that Securities and Exchange Board of India (Sebi) will allow investors to tender their shares during delisting offers on stock exchanges, which will help reduce their tax outgo.Traders will also be reacting to the better than expected numbers of market heavyweight Reliance Industries, the company’s consolidated net profit for second quarter inched up by1.7% from a year ago and remained flat sequentially. However, its gross refining margins (GRM), fell for the second consecutive quarter mainly due to lower middle distillate cracks.

Today, there will be some important result announcements too, to keep the markets buzzing, Bajaj Auto, Bajaj Finserv, Bluedart and Symphony etc.

The US markets slumped again in last session, extending the recent sell-off, with the Dow falling to its lowest levels in six months, lacking any major US economic data. The Asian markets have made a mixed start, some of the indices in the region are mirroring a rout in global equities and the Japanese market has suffered sharp plunge after the holiday.

Back home, Indian equity benchmarks staged a smart recovery in last leg of trade on Monday and ended the session in green with modest gains, supported by short-covering in beaten down but fundamentally strong stocks. Nevertheless, traders remained cautious ahead of Consumer Price Index (CPI) data to be announced later in the day; however it is expected to ease to 7.2 per cent for the September as compared to 7.8 per cent reported in the month of August, helped by lower food and fuel costs. Earlier in the day, benchmark indices languished in the negative territory till early noon trades and even went on to test important psychological 26,100 (Sensex) and 7,800 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon. On the global front, European markets pared early losses, however, Asian markets ended mostly in the red. Back home, appreciation in Indian rupee against dollar supported the sentiments. Some support also came after Finance Minister Arun Jaitley has given the go-ahead for a major overhaul of the current monetary policy framework wherein the Centre will specify ‘inflation targets’ for the Reserve Bank of India (RBI) to achieve and the RBI will set inflation as its top priority in its policy statements. However, gains remained capped after August industrial output disappointed street. Index of Industrial Product (IIP) rose by just 0.4 per cent in August, substantially below the expectation of 2.4 per cent. Meanwhile, JP Morgan lowered its India GDP growth forecast for 2014-15 to 5.1% from 5.3% because of weak factory output data. However, metal shares edged higher on the back of encouraging trade data from China, the world’s largest consumer of metals. Finally, the BSE Sensex gained 86.69 points or 0.33%, to 26384.07, while the CNX Nifty added 24.30 points or 0.31% to 7,884.25.