Markets to make a gap-down start on tepid global cues

The Indian markets suffered huge cuts in last session, concerned about the weak macro data. Today, the start is likely to be on a soft note and markets will decline tailing the weakness in the global markets, and Nifty may come closer to retest the 7700 levels. Traders will be keeping an eye on wholesale price index (WPI) data for October, slated to be announced later in the day. Though, the trade is likely to remain under pressure and can even deteriorate further in latter half reacting to the trading in European markets, but traders may get some support with Prime Minister Narendra Modi stating that FDI into India has increased by 40 percent since last year which shows the increasing global confidence in the country. Export oriented stocks may see some action, as Commerce and Industry Minister Nirmala Sitharaman has said that the government is taking steps to increase India's total exports to $900 billion by 2020. Contracting for the 10th month in a row, India's merchandise exports dipped 24.33 percent in September to $ 21.84 billion. PSU stocks too will be buzzing, as the government has begun the process of inter-ministerial consultations for putting a framework to sell loss-making and non-strategic public sector units. Some action can be seen in the PSU oil marketing companies with the hike of Petrol price by 36 paisa a litre and diesel by 87 paisa per litre in line with firming global rates.

The US markets slumped in last session on getting weak retail sales data and an unexpected drop in producer prices. The Asian markets have made a weak start, as investors responded to Europe’s worst terror attack in a decade by shifting out of riskier assets, also as the Federal Reserve prepares to raise interest rates for the first time since 2006, while economic data from Japan and the European Union showed worse-than-estimated growth.

Back home, Indian equity benchmarks ended Friday’s session in red territory with a cut of around a percent, losing more than what they had gained on the special Muhurat trading session, as sentiments were weighed down by selling in Capital Goods, Auto and FMCG stocks amid weak global cues. After a gap-down opening, markets remained sluggish throughout the session. The indices even went on to test important psychological 25,550 (Sensex) and 7,750 (Nifty) levels. Apart from blue chips, broader indices too were weak with both mid cap and small cap indices ending down by around a percent each. The overall sentiment remained down-beat from beginning of the trade on the back of disappointing macroeconomic data with the industrial growth falling to a four-month low of 3.6 per cent in September, dampened by a slower expansion in the mining sector, as compared to downwardly revised 6.3 per cent growth in August and the Consumer Price Index-based (CPI) inflation for October rising to five per cent - the highest in three months as compared to 4.41 per cent in September. Further, Investors also failed to get any sense of relief with the Fitch Ratings’ report that indicated 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. Markets despite in red traded in a range taking support with the statement of the International Monetary Fund (IMF) that it broadly supports the series of economic reforms undertaken by India, which is moving in the right direction. Further, traders also got some support with the statement of Prime Minister Narendra Modi that India will no longer resort to retrospective taxation, while acknowledging that such steps were adversely affecting the mood of existing and potential investors. On the global front, weak opening in European counters too dampened the sentiments, while the Asian shares ended mostly lower. On the secoral front, shares of interest rate-sensitive sectors such as banking, real estate and autos traded lower on the back of disappointing macroeconomic numbers as investors became cautious and focus on the tone of the central bank. The fifth bi-monthly monetary policy of the RBI is scheduled on December 1, 2015. However, the metal pack on the BSE was one of the two which posted gains, supported by surge in Jindal Steels, JSW Steel and Coal India. Finally, the BSE Sensex declined by 256.42 points or 0.99% to 25610.53, while the CNX Nifty lost 62.75 points or 0.80% to 7762.25.