Markets to make a cautious but positive start of the new week

The Indian markets ended modestly in red in last session and bourses lost their way after the Services PMI showed weakest reading since July. Today, the start of the new data heavy week is likely to be positive and the traders will be first reacting to the cabinet expansion of the Narendra Modi government, with 21 new faces and changes in the leadership of key ministries. Meanwhile, echoing the sentiments of India Inc, the Confederation of Indian Industry (CII) has said that the ministry-expansion will help improve the focus on economic recovery. However, there will be some cautiousness in the market with Reserve Bank of India Deputy Governor H.R. Khan stating that India's inflation has a “long way” to go before it eases because of high input costs, while the reasons for elevated food price inflation remain “structural.” There is likely to be buzz in the PSU banking stocks, as the Finance Minister Arun Jaitley has said that the government is planning to bring down its stake in public sector banks to 52 percent so as to meet Rs 3 lakh crore capital requirement. The realty stocks too will be in action as the Finance Minister has also said that the government will amend the tough land acquisition law even if the opposition does not support.

The US markets made a mixed closing in last session, as the monthly jobs report showed that though the unemployment rate slipped to a six-year low of 5.8%, the new jobs generation remained lower than expected. The Asian markets have made mostly a positive start led by the Hong Kong markets after regulators announced the long awaited stock link with Shanghai will commence in a week. However, the Japanese market was trading lower as the yen has strengthened against dollar.

Back home, Indian equity benchmarks made a flat close on the last day of holiday truncated week, with a negative bias as investors opted to book some profits after recent rallies. Market-participants also remained on sidelines ahead of portfolio rejig, which is likely to take place over the weekend. As per reports, at least a dozen new ministers are set to be inducted by Narendra Modi’s government as part of the cabinet expansion that is likely to take place on Sunday, November 9, 2014.  Sentiments also remained dampened as the Paris-based think tank OECD, revising its forecast downwards, projected 5.4 per cent growth for the Indian economy this year, as global recovery continues at a moderate pace. Earlier in September, it had projected 5.7 per cent growth rate for India. On the global front, European markets traded higher on hopes that the European Central Bank may announce monetary easing measures to boost growth, however, Asian markets ended mostly in the red. Back home, depreciation in Indian rupee too dampened the sentiments. Meanwhile, metal shares edged lower after the services purchasing managers’ index (PMI) compiled by HSBC/Markit came lower at 52.9 in October, the weakest reading since July, from 53.5 in September. Moreover, banking stocks too lost sheen after global credit rating agency Moody’s said that the asset quality of state-owned banks will continue to be burdened by weak financial health of Indian corporate. Finally, the BSE Sensex lost 47.25 points or 0.17%, to 27,868.63, while the CNX Nifty slipped 1.30 points or 0.02% to 8,337.00.