Markets likely to get a soft-to-flat start

The Indian markets made a flat closing in last session and today the start after a break is likely to be soft-to-cautious tailing sluggish global cues. Traders will be reacting to the economic think-tank, the National Council of Applied Economic Research's (NCAER) latest projection, where it has lowered India’s GDP growth forecast to 5 percent in the current financial year on weak economical fundamentals and uncertainties in growth prospects. However, there will be some support from the global front, as the World Bank, which recently ranked India 142nd in its ease of doing business list, said the ranking will improve by at least 50 notches if one includes the best practices followed at the state level. IT stocks are likely to be in action on Indian banking and securities companies will spend Rs. 469 billion on internal and external IT services, software, hardware and telecommunications in 2014. Aviation stocks too are likely to be in limelight as the Indian domestic air traffic grew at a record pace of over 26 percent in September compared to the same month last year. 

The US markets continued their consolidation mood and made a mixed closing in last session, amid uncertainty about the outcome of midterm elections and weighed down by sharp drop in the crude prices. The Asian markets have mostly made a soft start, led by Hong Kong and Shanghai markets which are trading lower after China’s Services Purchasing Managers Index fell to 52.9 from 53.5 in September.

Back home, trade at Indian equity markets remained lackluster and range bound on Monday after a four-day rally, lacking any fresh buying interest. Though, benchmarks hit another life time high levels in early session of trade, profit-booking gripped markets thereafter. Sentiments got dampened after the eight core sector’s growth plunged to eight-month low of 1.9 per cent in September much lower than 5.8 per cent in August this year, as output in crude oil, natural gas and fertiliser declined. However, down-side remained capped as some support came in with Finance Minister Arun Jaitley’s statement that economic growth in the current fiscal will be in the 5.5-5.9 per cent range and declining prices of crude oil and food will help lower inflation. FM has outlined major priorities of the government as reviving and sustaining higher GDP growth, increasing savings, fiscal consolidation, keeping the Current Account Deficit at moderate level and reviving investment cycle, among others. Meanwhile, factory activity expanded at a modest pace in October, as stronger demand led manufacturers to add jobs for the first time in four months and allowed them to raise prices. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, rose to 51.6 in October from 51.0 in September. The index has now been above the 50 level that indicates an expansion in activity for a year. The global cues remained somewhat sluggish; European markets traded lower, while Asian markets ended mostly in the red. Back home, shares of most of the frontline automobiles companies ended in red after reporting drop in vehicle sales during the month of October. However, real estate and infrastructure scrips attracted investor interest as the government relaxed foreign direct investment (FDI) rules in the construction sector by reducing minimum built up area as well as capital requirement and easing exit norms. Additionally, shares in Indian airline companies surged after state-run oil marketing companies slashed jet fuel prices since fuel charges contribute to nearly one-third of an airline's operational expenses. Finally, the BSE Sensex lost 5.45 points or 0.02%, to 27860.38, while the CNX Nifty gained 1.95 points or 0.02% to 8,324.15. Indian markets remained closed on Tuesday on account of a local holiday.