Markets to make a soft-to-cautious start

The Indian markets bucking the global trend ended marginally in red in last session, the steady trade turned choppy in the final hours and markets lost momentum with some disappointing earnings. Today, the start is likely to be flat-to-cautious, though markets will be buzzing and may get some support with the government publishing the long-awaited proposals to overhaul an outdated and overburdened bankruptcy process. A government-appointed panel has suggested a modern bankruptcy law to deal with insolvency cases within 180 days that may arise on account of business failures or economic downturns, with a view to promoting ease of doing business and spur economic activities. Meanwhile, Finance Minister Arun Jaitley has said that first tranche of corporate tax reduction will be made when the next Finance Bill comes. Also, hinting at a possible consensus on land acquisition bill, he said the government is making efforts in that direction so that it could be taken up in the upcoming Winter Session. There will be some action in power stocks, as the Finance Minister has said that the government in the next couple of days will announce a major policy for the stressed power sector, which has been reeling under high debt.

There will be lots of important result announcements to keep the markets in action, including Tata Steel, Cipla, Sun TV, United Breweries, TGBL, SJVN, Oracle Financial and Novartis etc.

The US markets ended modestly in red in last session, with major averages pulling back off yesterday's three-month closing highs. Traders grew concerned reacting to the remarks by Federal Reserve Chair Janet Yellen about the outlook for interest rates. The Asian markets have made a mixed start, with some of the indices trading down by around half a percent, as bets on US interest rates being increased next month heightened, though the Chinese market was again trading higher by over two percent.

Back home, Wednesday’s trading session turned out to be a disappointing for the Indian equity markets as bourses failed to sustain the gains in late afternoon trade and end up in negative territory. The domestic benchmarks traded with traction for most part of the trades but a sharp wave of selling, which emerged in last leg of trade, dragged the key gauges below their neutral lines. Earlier, markets made a gap-up opening as sentiments remained up-beat with Finance Minister Arun Jaitley’s statement that the government, in the next few days, will list out the exemptions to be phased out as part of its plans to gradually bring down corporate tax rate to 25%, the first tranche of which will be announced in the Budget in February. Traders also drew some encouragement with report that the Nikkei Business Activity index climbed to 53.2 in October, from 51.3 in September, driven by a significant rise in new business order. The seasonally adjusted Nikkei India Composite PMI Output index, which maps both manufacturing and services sectors, rose to 52.6 in October from 51.5 in September helped by new businesses. However, sentiments took U-turn in late trade as investors booked all of their gains amid caution over the outcome of Bihar election and some disappointment over Q2 corporate earnings. On the global front, European counters made a positive start, while the  Asian markets rallied. Back home, Buying in Auto space too supported sentiments led by over six percent gains in Tata Motors shares on the back of better-than-expected JLR sales in the US. Metal stocks too remained on buyers’ radar on rebound in the commodity prices amid surge in the China markets. On the flip side, power stocks ended in red despite report that power distribution companies (discoms) could soon be getting a lifeline as the Cabinet will take up a proposal to restructure their debt this Thursday, adding that the headroom under the Fiscal Responsibility and Budget Management (FRBM) scheme will be put to use and old loans will be converted into bonds. Finally, the BSE Sensex declined by 37.67 points or 0.14% to 26552.92, while the CNX Nifty lost 20.50 points or 0.25% to 8040.20.