Markets to get a cautious start on mixed global cues

The Indian markets despite losing momentum in second half managed to extend the gains in last session. Today, the start is likely to remain cautious and some profit taking may appear in the early deals tailing the global cues and reacting to the Prime Minister Narendra Modi’s announcement that the government will not repromulgate the controversial ordinance on land acquisition which expires today, a major blow to his economic reform agenda. However, there will be some recovery once the market stablises, with RBI Governor Raghuram Rajan’s hint of an imminent rate cut, after he said that inflation has come down to the comfort zone quicker than expected and he is keeping a watch on data to see how much room is there for further easing of the monetary policy.  Meanwhile, Finance Minister Arun Jaitley  said that cost of money has to come down if India has to achieve 8-10 percent growth. Traders will also be getting some support with the statement of the president of the US India Business Council (USIBC) that India should take steps to improve its “ecosystem” for businesses and take advantage of the slowdown in China to woo US companies who are ready to set up manufacturing facilities in the country. Power stocks are likely to remain in action as the Centre is planning to supply affordable electricity to rural households by creating huge demand for setting up solar and thermal power capacities. Also, as Delhi’s CM has urged Prime Minister Narendra Modi to intervene and allow cancellation of agreements with power companies.

The US markets made a flat closing in last session after witnessing a volatile day of trade on mixed economic data. The Asian markets too have made a mixed start and the Chinese market has slumped once again, there were some reports that China’s securities regulator asked brokerages to step up their support for share prices by contributing 100 billion yuan ($15.7 billion) to the nation’s market rescue fund and increasing stock buybacks.

Back home, Indian Equity benchmarks started the new F&O series on positive note on Friday, with Nifty recapturing its crucial 8,000 level, while Sensex ended just shy of 26,400 mark. Markets traded with traction during the trade, though huge round of volatility witnessed in last leg of trade where frontline gauges trimmed most of their gains but still managed to end the session with a gain of over half a percent. Sentiments remained up-beat as investors were hopeful for a rate cut by the Reserve Bank of India (RBI) at its policy meeting on September 29. Some support also came with Finance Minister Arun Jaitley’s statement that India, with 8-9 percent growth rate, can replace China as the driver of world economy. Some encouragement came with the government’s announcement of the ambitious Smart City project, which is hoped to attract investment to boost the economy. Government has announced Rs 48,000 crore for development of 100 Smart cities out of which 98 names were declared and rest two will be nominated in due course. However, markets trimmed gains in last leg of trade as investors turned cautious with Reserve Bank of India Governor Raghuram Rajan’s statement that the central bank will continue its focus on taming inflation, speeding up resolution of distressed projects and ensuring enough capital for banks through balance sheet clean-up. Depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 66.15 per dollar at the time of equity markets closing compared with its previous close of 66.04 per dollar. On the global front, European counters, after a positive opening, entered into red, while Asian markets ended mostly in green. Back home, oil stocks flared up after oil prices rebounded by more than 10% on Thursday to post their biggest one-day rally in over six years following a report that Venezuela asked the Organization of the Petroleum Exporting Countries to hold an emergency meeting. Finally, the BSE Sensex surged by 161.19 points or 0.61% to 26392.38, while the CNX Nifty gained 53.00 points or 0.67% to 8001.95.