Markets to make a cautious but green start ahead of RBI’s policy announcement

The Indian markets showed a volatile trade in last session and traders remained cautious ahead of key GDP data announcement. Today is a crucial day for the markets as the Reserve Bank of India’s (RBI) will come up with its fifth bi-monthly monetary policy review, though there is least chance of any rate tinkering, but the statement of the governor will be keenly watched. The markets will first be reacting to the report that India's Gross Domestic Product for the second quarter (July-September) of 2015-16 grew at 7.4%. The economic activities which registered growth of over 7.0 percent in Q2 of 2015-16 over Q2 of 2014-15 are ‘trade, hotels and transport & communication and services related to broadcasting’, ‘financial, insurance, real estate and professional services’ and ‘manufacturing’. Also, India’s April-October fiscal deficit touched 74% of the full year target, while it was 89.6% of the budget estimates in the same period last year. The PSU stocks too are likely to see some action as the Economic Affairs Secretary has said that government is keen to maximize divestment and the issue is constantly under review by Finance Ministry. Some buzz can be seen in the PSU oil marketing companies, after the petrol and diesel prices were reduced in the fortnightly review. The Auto stocks will remain in action once the monthly sales numbers starts trickling in.

The US markets remained in consolidation mood and ended mostly lower in last session, on uncertainty ahead of several key events in the coming days and some weak economic data of pending home sales in October. The Asian markets have made mostly a positive start led by the Japanese market on report that Capital spending by Japanese companies surged the most in eight years. On the other hand the Chinese market was slightly in red on mixed economic report, while a private measure of Chinese manufacturing came in stronger than expected, an official factory index slid to the lowest in more than three years.

Back home, Indian equity benchmarks ended the Monday’s session flat, as investors remained on sidelines ahead of ahead of Gross Domestic Product (GDP) data to be announced later in the day. Traders also remained wary ahead of Reserve Bank of India’s (RBI) fifth bi-monthly monetary policy review tomorrow and continuing fund outflows by foreign investors. India's economic growth likely picked up in the July-September quarter, outpacing China on improving domestic demand and manufacturing activity that could persuade the Reserve Bank of India to keep interest rates unchanged on Tuesday. Some concern also came with report that foreign portfolio investors pulled out more than $1 billion from the domestic equity and bond market over the last one month. In 2015-16 so far, foreign institutional investors (FIIs) have sold $2.40 billion in equity, the steepest selling since fiscal year 2009. However, the markets got some support with report that government in a move to bring the Congress on board and pass the Goods and Service Tax (GST) Bill in the Parliament, may opt for more than one GST rate. GST could help raise GDP growth to around 8 percent in the next fiscal year. On the global front, European counters made a weak start, while Asian markets ended mostly in red. Back home, recovery in Indian rupee aided sentiments. Buying in Capital goods counter too supported the sentiments, after the Heavy Industries and Public Enterprises Minister Anant Geete said the government is committed to provide all necessary support to make India`s manufacturing sector globally competitive and a wide array of smart technologies needs to be adopted for the purpose. Stocks related to auto space too remained on buyers’ radar, as buying emerged in Maruti Suzuki, Tata Motors and Ashok Leyland ahead of their inclusion in MSCI India index which will be effective from 1st December. Finally, the BSE Sensex gained 17.47 points or 0.07% to 26145.67, while the CNX Nifty lost 7.45 points or 0.09% to 7935.25.