Markets to get a positive start tailing supportive global cues

 The Indian markets suffered cut of over half a percent despite good macro data in last session, on Fed concern. Today the start is likely to be in green following the optimism of the other regional markets. Though there will be some cautiousness too that may restrict any sharp gains, as the exports fell for the ninth consecutive month, dipping by 20.66 per cent in August to $21.26 billion on the back of a steep decline in engineering and petroleum shipments. There will be some support with the government's decision to consider foreign investments in partly paid shares and warrants eligible instruments under the foreign direct investment policy, bringing greater flexibility in their use to raise capital. Traders will also be eyeing the Sebi meeting with top managers from ratings agencies on market conditions and how the credit profile changes can impact the corporate bond market and the mutual fund industry, in the wake of two recent downgrades which have caused turmoil in a few mutual funds. There will be some buzz in the power sector, as the government is expecting an investment of Rs 36,000 crore in green energy corridors across the country.

The US markets rallied in last session, recovering more than what they had lost in previous one, on optimism that Federal Reserve will leave interest rates unchanged later this week. The Asian markets have made a good start and some of the indices are trading up by over a percent tailing the gains in the US markets, though markets are split on what action Fed policy makers will take Thursday.

Back home, Tuesday turned out to be disappointing session for the Indian equity indices which got pounded by over half a percent, as investors booked profits ahead of the much-anticipated US Fed’s two-day policy meeting starting tomorrow, any rate hike in the US would not only strengthen the dollar but would lead to selling from foreign investors in emerging market stocks. Concern about the monsoon too dampened sentiments. The India Meteorological Department (IMD) reported that India is headed towards the driest monsoon season for the third time in three decades. Renewing concerns over poor harvest and spike in food inflation, the monsoon rainfall deficit so far has widened to 16 percent. Better-than-expected inflation data too failed to impress D-Street. The consumer price index (CPI) declined to a nine-month low of 3.66 per cent in August from 3.69 per cent in July, but the rate of food price rise went up to 2.20 per cent from 2.15 per cent, that may lead RBI think again before going for its fourth rate cut in the year. Sentiments also remained down-beat on report that Foreign investors have already sold $995.5 million of Indian shares so far this month, according to data from National Securities Depository, after selling around $2.6 billion in August - the biggest monthly sales ever. Global cues too remained sluggish with European counters trading in red in early deals, while Asian markets ended mostly in red. Back home, Selling in Metal counter too weighed down sentiment as China's investment and factory output in August missed forecasts, raising concerns over the growth of world’s second largest economy. Banking counter too witnessed selling after Reserve Bank of India (RBI) Deputy Governor R. Gandhi said there was an “urgent” need for banks to reduce their stressed assets, given the impact on liquidity and capital in the sector. He also said that the RBI had received a proposal to limit the number of banks in a lending consortium as a way to improve recovery of loans. Finally, the BSE Sensex declined by 150.77 points or 0.58 % to 25705.93, while the CNX Nifty lost 43.15 points or 0.55 % to 7829.10.