Markets likely to make a cautious but positive start

The Indian markets remained in rally mood despite weak global cues and added about another half a percent gains in last session. Today, the start is likely to be in green though there will be some cautiousness too, with Indian exports shrinking by 5.04 per cent to $26 billion in October and at the same time imports growing by 3.26 per cent because of increased gold imports. India`s trade deficit in October increased by 26.06 percent at $13.35 billion, from $10.59 billion in the corresponding month of last year. However, the markets may gain some momentum in the latter trade with Finance Minister Arun Jaitley batting for a rate cut. He said that inflation has moderated and global fuel price has eased and hoped that Reserve Bank of India would prune interest rates as it will give a ‘good fillip’ to the Indian economy. There will be some buzz in companies related with insurance business as the Finance Minister has said that the Select Committee of the Rajya Sabha on the Insurance Laws (Amendment) Bill will hopefully submit its report in the upcoming winter session of parliament furthering the government's reform agenda.

The US markets made a flat closing in last session, though the trade remained lackluster throughout the day as traders expressed uncertainty about the global economic outlook following mixed developments overseas. The Asian markets have made mostly a cautious start; though the Japanese market has bounced back awaiting a decision by Japanese Prime Minister Shinzo Abe to put off a sales-tax increase after the country’s economy entered recession.

Back home, Indian equity benchmarks staged a smart recovery in last leg of trade on Monday and ended the session in green with a gain of around half a percent, supported by short-covering in beaten down but fundamentally strong stocks. Earlier in the day, after opening in red, key benchmark indices languished in the negative territory till early noon trades. The indices even went on to test important psychological 27,900 (Sensex) and 8,350 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon. Sentiments turned positive after data showed that trade deficit narrowed to $13.35 billion in October from $14.25 billion in the previous month on the back of decline in oil imports. India's imports fell to $39.45 billion from $43.15 billion in September, but on a year-on-year basis, it has increased 3.16 percent. Meanwhile, exports in October hit lowest level since March 2014. It fell to $26.09 billion from $28.90 billion last month. On a year-on-year basis, the fall has been to the tune of 5.04 percent. Some support also came on report that Services exports rose 5.3 per cent to $ 12.94 billion in September this year compared to the same month last year. Meanwhile, industry chamber Assocham has suggested that government must use the opportunity to integrate proposed Foreign Trade Policy with the ‘Make in India’ programme. However, global cues remained somber with European markets starting in the red. Back home, sentiments remained up-beat on report that foreign institutional investors were net buyers in Indian equities worth Rs 645.90 crore on Friday, as per provisional stock exchange data. Meanwhile, shares of gold jewellery remained on buyers’ radar after reports suggested of RBI was in talks with govt to increase gold import curbs. October gold shipments to India, jumped to about 150 tonnes from less than 25 tonnes a year earlier and 143 tonne in September. Besides, sugar stocks too edged higher after the department of food estimated a total production of 25 million tonnes of sugar in the new sugar season starting October 2014 -September 2015, similar to the production level last year, which is higher than the first advance estimate of 24.5 mn tonne and the increased production is estimated due to higher acreage in Maharashtra and Karnataka and carries over stock of 3-4 lakh tones. Finally, the BSE Sensex surged by 131.22 points or 0.47%, to 28177.88, while the CNX Nifty gained 40.85 points or 0.49% to 8,430.75.