Markets to make a flat-to-positive start

The Indian markets despite a valiant effort closed marginally in red in last session. Today, the start is likely to be in green but the trade may remain range bound as there is no any major cue to lift the markets. Traders will be a bit cautious with the Asian Development Bank’s statement that growth in developing Asia will likely be slower than previously thought as a slowdown in China's economy hurts demand; it has also urged policymakers in the region to strengthen financial-system buffers against external shocks. However, markets will get some support with Commerce and Industry Minister Nirmala Sitharaman’s statement that notwithstanding a financial crisis being experienced by major economies like China, India “stands out” as a “shining star” in the global economy and is sustaining a certain momentum despite challenges. Finance Minister Arun Jaitley too has said that continuing reforms will push India's economic growth higher than last year's 7.3 percent despite adverse global winds. There will be some buzz in the oil & gas stocks, as the government will open the bids for 69 marginal oil and gas fields from late November or early December. On the same time the PSU oil marketing companies will be under pressure on sudden surge in international crude prices.

The US markets made a good start of the new week and ended higher in last session, though the trade remained choppy but traders picked up stocks at relatively reduced level after Friday's sell-off and overlooked National Association of Realtors' report showing a much bigger than expected decrease in existing home sales in August. The Asian markets have made mostly a positive start tailing US markets and after European Central Bank said it was prepared to ease monetary policy further.

Back home, Indian equity benchmarks staged a smart recovery on Monday and ended the session on quiet note, pairing almost all of their early losses, supported by short-covering in beaten down but fundamentally strong stocks. Nevertheless, traders remained cautious ahead of the near-month September derivatives contracts expiry on Thursday, as traders roll-over positions to the October 2015 series. Earlier, the markets made a gap-down start tracking weak global cues, but recovering from initial hiccups started moving higher to end flat, even though there were bouts of profit taking witnessed at continuous intervals. Progress of monsoons with IMD reports stating that the overall monsoon deficit has dropped to 14% of the benchmark long-period average (LPA) from 16% acted as a positive trigger. Traders also got some support with a report of SBI Research, that the three conditions that influence action on rate cut seem to be fulfilled. Benign food inflation, sufficient transmission of policy rates and spread of normal/excess monsoon over 64 percent of the country makes a case for at least 25 bps cut in repo rate. RBI, which has lowered the benchmark rate by 75 basis points so far this year in three installments, is scheduled to hold its next bi-monthly monetary policy meet on September 29. Some support also came with Finance Minister Arun Jaitley’s statement that the government is confident of the new GST regime to roll out from the next fiscal and expressed confidence about an early resolution of pending disputes on direct taxes front. Firm opening in European counters too supported the domestic markets, however, Asian markets fell. Back home, Banking space edged higher with major banking stocks surging over a percent. There was sudden surge in IDBI Bank on report that government is considering privatisation of state-owned lender on the lines of Axis Bank. The government presently holds 76.5 per cent in IDBI Bank. Finally, the BSE Sensex declined by 25.93 points or 0.10% to 26192.98, while the CNX Nifty lost 4.80 points or 0.06% to 7977.10.