Markets to make a cautious start, may recover in latter trade

The Indian markets after declining for whole last week are likely to get a cautious start of the new weak amid sluggish global cues. Traders will be eyeing the manufacturing PMI data, which will be released later in the day for further cues. There will be  some support to the markets once after it stabilizes, as concerned over exports contracting for the 10th month in a row, the commerce ministry has extended duty incentives to several products including textiles, pharmaceuticals, project goods, auto components and telecom, computer, and electronics products, in a bid to boost exports. Also Finance minister Arun Jaitley has said that the government was looking to ease foreign direct investment rules and reduce the number of approvals needed to speed up investment. There will be some buzz in the pharma sector, as Pharma pricing authority NPPA has capped prices of 18 formulations packs. Meanwhile, the government has formed an inter-ministerial committee to review the Drug Price Control Order (DPCO) 2013. The committee will look into the drug pricing mechanism as there have been complaints that the companies are making significant profits which go up to few thousand per cent. Auto stocks too will be in action based on their monthly sales numbers.

Today, also host of big companies will be announcing their numbers and that will keep the markets buzzing.  Adani Ports & Special Economic Zone,AIA Engineering, ADLabs, India Cements, Indian Bank, Oriental Bank of Commerce, Care Ratings, eClerx, United Breweries, United Spirits and Pantaloons Fashion & Retail etc will come with their quarterly numbers.

The US markets made a weak closing in last session, closing at their worst levels of the day after a pullback in late trade, on uncertainty about the near-term outlook for the markets. The Asian markets have made mostly a soft start, the Chinese market too was trading lower despite the preliminary Caixin China manufacturing purchasing managers' index (PMI) rising to 48.3 in October, against final reading of 47.2 in September, but still below the 50 level.

Back home, extending their losing streak for fifth straight session, Indian equity benchmarks ended the choppy day of trade in the red terrain with a cut off over half a percent as investors continued to sell off risky assets amid US Federal Reserve’s statement putting into play a rate hike this year. Selling in last leg of trade mainly dragged the markets below their crucial 26,700 (Sensex) and 8,100 (Nifty) levels. Earlier markets traded with traction as some support came with World Bank retaining its India growth forecast for 2015-16 saying it will continue to grow, faded amid intense selling pressure. In its latest ‘India Development Update’ World Bank expects India's economic growth to be at 7.5% in 2015-16, followed by a further acceleration to 7.8% in 2016-17 and 7.9% in 2017-18. Traders drew some sense of relief after rating agency India Ratings in a report said that the US Federal reserve's intention to hike rates in December was positive for markets and would remove uncertainty. Some support also came in with the Reserve Bank of India’s notification that non-resident Indians (NRIs) can opt to invest in the National Pension System (NPS), the move will help boost dollar inflows into the country. However, markets took u-turn and entered into red terrain in last leg of trade as disappointing results from ITC and Larsen & Toubro raised concerns about the health of the corporate sector. Stocks of ITC edged lower by over four percent after the company’s total income has decreased by 0.82% to Rs 9303.43 crore for the quarter under review, however the company has reported 0.25% rise in its net profit at Rs 2431.25 crore for the quarter ended September 30, 2015. Though L&T Q2 numbers were mostly in line with estimates but the company cut its order inflow guidance to 5-7 per cent, from 15 per cent earlier dragged the stocks below four percent. Traders also remained concerned ahead of the outcome of the Bihar election results. Selling extended with European counters exhibiting weak trade in early deals, while Asian markets too ended mostly in red. Back home, banking stocks remained on buyers’ radar, supported by good Q2 numbers from Yes Bank and ICICI Bank which came up in-line with street’s expectations. Aviation stocks too edged higher, after the government released the new draft aviation policy for inputs from stakeholders before finalisation. Finally, the BSE Sensex declined by 181.31 points or 0.68% to 26656.83, while the CNX Nifty lost 45.95 points or 0.57 % to 8065.80.