Markets to taste recovery with a positive start

The Indian markets extended their decline for the sixth straight day in last session, on some weak macro data and disappointing earnings. Today, the start is likely to be in green and markets will taste some gains on positive global cues. On the domestic front, there will be support with growth in eight core sectors rising to 4-month high of 3.2 percent in September because of sharp pick-up in fertiliser production and electricity generation. Core sector that comprises nearly 38 percent of India’s total industrial production had grown at 2.6 percent in the same month of last year. Also, Moody's Investors Service projecting stable growth rate for India has said the economy would grow at 7.5 percent in the current fiscal and improve marginally in the following year. The aviation stocks that have been flying high since past some time are likely to get further strength with a private report stating that the number of air travellers in the country is slated to rise more than threefold to 218 million by 2025 from 70 million in 2015 and each metro requires a second greenfield airport to handle the traffic.

Lots of earnings announcements too will keep the markets buzzing for the day. ABB, Adani Power, Chambal Fertilizers, DLF, IndianOil, GAIL, Tech Mahindra, Reliance Power, PVR etc will be among many to announce their numbers.

The US markets rallied in last session, all the major indices surged to over two months high, reacting to some merger-and-acquisition news and filling markets with optimism about the outlook. The Asian markets have made mostly a higher start tailing cues from the US markets and as inflation in South Korea unexpectedly increased at the fastest pace in almost a year, helping the government assessment that economy is in turnaround. 

Back home, extending their southward journey to sixth straight session, Indian equity benchmarks ended the session slightly in red on Monday. Sentiments remained downbeat after India’s manufacturing sector growth slipped further and touched a 22-month low in October largely due to a slower increase in new orders, but firms hired additional workers. Sentiments also remained dampened on report that foreign institutional investors (FIIs) have reduced their exposure in 35 Nifty companies during July-September quarter as they recast their portfolio primarily on account of global factors. Domestic indices even went on to test important psychological 26,400 (Sensex) and 8,000 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trimmed their losses from thereon as investors continued hunt for fundamentally strong stocks. Traders drew some solace with report that Global rating agency Moody's has upgraded its outlook for the Indian banking system to stable from negative on gradual improvement in operating environment. Some support also came with Finance Minister Arun Jaitley’s statement that the government was looking to ease foreign direct investment rules and reduce the number of approvals needed to speed up investment. On the global front, European counters trading mostly in green, while Asian markets ended mostly in red. Back home, selling in some banking counter also weighed sentiments despite Moody’s Investor Services revising outlook on the Indian banking system to stable from negative, owing to the changing operating environment of local banks. Finally, the BSE Sensex declined by 97.68 points or 0.37% to 26559.15, while the CNX Nifty lost 15.00 points or 0.19% to 8050.80.