Markets may not extend the Muhurat session gains, likely to start on a soft note

The Indian markets though slumped on Tuesday on global as well as domestic concerns of economic growth, but performed splendidly in the special Muhurat Trading session and posted gains of around half a percent. Today, the start of the last trading session of the week is likely to be soft and the markets may not extend the festivity of Diwali trade, instead witness some selling. Not only the weak global cues but disappointing macro data too are likely to weigh on the sentiments, with the double whammy of a industrial production slackening to a four-month low of 3.6 percent, while retail inflation inching up to 5 percent, its three month high. Industry body Assocham has said that two key macro indicators clearly point out that the economy still faces several tough challenges. However, sector specific actions will keep the markets in action with the government further opening up 15 sectors. Fitch Ratings has said that liberalisation of foreign direct investment (FDI) rules in 15 sectors is a significant structural macroeconomic reform that will support investment and real GDP growth over the long term. There will be some support with a report stating that India is the only country that has the potential to change the world in the 2020s in the way that China changed it in the 2000s. PSU oil marketing companies will be buzzing with the slump in international crude prices.

The US markets slumped in last session with the sharp decline in crude, although the initial jobless claims came in flat in the week ended November 7th. With the losses the major averages pulled back further off the three-month highs set earlier this month. The Asian markets have made a soft start tailing the weakness in the US markets and led by the commodities decline. Chinese shares too dropped on slowing credit growth.

Back home, Tuesday turned out to be a disappointing session for the Indian equity indices which got pounded by around one and half a percentage point, on account of sustained selling in frontline line blue-chip stocks amid weak Asian markets on worries about the likely US rate hike. The domestic benchmarks traded range bound for most part of the session but a sharp wave of selling, which emerged in last leg of trade, dragged the key gauges below their crucial support levels of 25,750 (Sensex) and 7,800 (Nifty). After a lower opening, the domestic bourses never looked in recovery mood. Further, weak global markets sentiment and the loss of the NDA in the Bihar elections also created uncertainty among the investors, as the poll debacle is perceived as a major challenge for the government to push the key economic reform initiatives. Investors failed to get any sense of relief with the Paris-based think tank OECD’s latest forecast, which despite cutting the global growth forecast said that with “relatively robust” growth prospects, the Indian economy is expected to expand by 7.2 percent this fiscal. Also, Fitch Ratings had said that BJP's defeat in the Bihar assembly elections is unlikely to have any major implications on the economic front. Moreover, traders also overlooked strong indirect tax collections data which registered an increase of almost 36% in the first seven months of the current fiscal at Rs 3.83 lakh crore on the back of a spurt in economic activity. On the sectoral front, strong selling pressure was witnessed in, oil & gas and metal stocks. Cairn India fell over 5 per cent while ONGC plunged nearly 5 per cent amid continuing weakness in crude prices. Among metal stocks, Vedanta declined 3.68 per cent and Tata Steel 1.9 per cent. On the other hand, some buying was witnessed in auto and consumer durable stocks on hopes that the festive season will perk up sales. Markets made a bounce back in the special Muhurat Trading session on Diwali day. While the BSE Sensex with a triple digit gains ended above 25850, the NSE Nifty maintained its 7800 level since opening till last. BSE Sensex rose for the 9th time in last 11 Muhurat trading sessions, markets not only took heart from the European markets despite weak closing of most Asian market, but received the booster dose from the government, which opened up 15 sectors including real estate, defence, civil aviation and news broadcasting in a bid to push up reforms. Finally, the BSE Sensex ended higher by 123.69 points or 0.48% to 25866.95, while Nifty ended up by 41.65 points or 0.54% to 7825.00.