Markets to make a cautious start going to the Diwali week

The Indian markets lost considerable ground in last session, with bourses losing their momentum in the final hours ahead of the exit poll results of the Bihar state elections. Today, the start is likely to remain cautious with exit poll not throwing a clear picture and showing a neck-in-neck fight between the two major groups, though some knee-jerk reactions can be seen in the early trades. Markets may see some upmove too in the latter trade going for the Diwali week and will be getting some support with Prime Minister Narendra Modi, asserting that infrastructure could play a pivotal role in bolstering India's economic growth, he has said that concerted efforts have led to rolling out of stuck projects worth Rs 4 lakh crore. However, any big gains are not expected and some cautiousness can be seen in the rate sensitives, as RBI Governor Raghuram Rajan has said that the central bank is comfortable with the current level of policy rates till more room builds up, even as the government expressed hope for further cuts. There will be some buzz in the power discoms and banks, as the government has approved a major power reform programme, Ujwal Discom Assurance Yojna, or Uday, to provide financial turnaround and revival of power distribution companies. There will be lots of result announcements to keep the markets buzzing.

The US markets bouncing back and forth across the unchanged line closed modestly lower in last session, ahead of the release of the Labor Department's closely watched monthly jobs report. The Asian markets have once again made a mixed start, though the Chinese stocks extended their weekly gain after entering a bull market Thursday.

Back home, Thursday turned out to be a disappointing session for the Indian equity indices which got pounded by around a percentage point, as investors remained concerned ahead of the exit poll results after the completion of the final phase of the elections in Bihar. The fifth and final round of voting for 57 seats across nine districts in the Bihar Assembly poll takes place today. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade at one month closing lows, breaching their crucial support levels of 26,250 (Sensex) and 8,000 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included realty, healthcare and banking. Sentiments remained dampened since beginning of the trade tailing the weakness in most of the Asian peers after Federal Reserve Chair Janet Yellen hinted a December interest rate hike in the United States. Traders failed to draw any sense of relief with Finance Minister Arun Jaitley’s statement that first tranche of corporate tax reduction will be made when the next Finance Bill comes. He also hinted at a possible consensus on land acquisition bill and said the government is making efforts in that direction so that it could be taken up in the upcoming Winter Session. On the global front, European counters traded mostly in green in early deals, while Asian counters ended mostly in red. Back home, depreciation in Indian rupee too dampened the sentiments. Banking and financial shares too remained under pressure on a possible Fed rate hike announcement. Power stocks too ended lower despite the Finance Minister stating 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. Finally, the BSE Sensex plunged by 248.72 points or 0.94% to 26304.20, while the CNX Nifty declined by 84.75 points or 1.05% to 7955.45.