Markets to make a weak start after last session’s rally

Indian markets witnessed a relief rally in last session and surged by over a percent, taking cues from the gains in regional peers and supported by some good earnings. Today, the start is once again going to be in deep red tailing the slump in Asian peers on global growth concern. The International Monetary Fund (IMF) cut its global growth forecasts for the third time in less than a year. The IMF cited a sharp slowdown in China trade and weak commodity prices that are hammering Brazil and other emerging markets. Markets after a gap-down start may get some comfort with minister of state for finance Jayant Sinha’s statement that the finance ministry and the Reserve Bank of India are working in tandem on a comprehensive solution to the stressed assets held by banks through asset-quality reviews followed by specific solutions. Also, a private survey has stated that almost two-thirds of Indian CEOs (64 per cent) are confident of their company's growth prospects over the next 12 months. Power stocks will be in action, as the government will consider a new power tariff policy which aims at promoting clean energy, better regulation of discoms and faster rollout of investments. There will be some scrip specific movement based on earnings announcements, with Reliance Industries third-quarter profit surged 39 per cent to Rs. 7,290 crore, an eight-year high, helped by a fall in global crude oil prices.

The US markets made a mixed closing in last session, sensing some relief from heavy recent losses amid hopes for stimulus from China's central bank. However, plunging oil prices prevented a more robust rebound. The Asian markets have made a weak start, with many of the indices reversing their last session gains trading down by 1-2 percent in early deals, as crude oil dipped below $28 a barrel and the International Monetary Fund reinvigorated concerns about global growth.

Back home, a session after capitulating to late sell-off, Indian benchmark indices managed to pull through a scintillating performance by rallying over a percentage point on Tuesday, thanks to the hefty short covering in the beaten down Banking and high beta Capital Goods counters. Sentiments got a boost with report that Indian economy is expected to grow by 7.9 per cent in the next fiscal and may progress at a similar pace over a couple of years extending beyond 2019. The report also added that the various macro parameters show that India has and is likely to perform better than its peers in the near term. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. However, gains remained capped with Reserve Bank of India Governor Raghuram Rajan's statement that implementation remains the major challenge for India's economy and if it can deliver on its promises the country will be 'the place to be'. Furthermore, investors also remained cautious with India's Group of 20 summit negotiator Arvind Panagariya’s statement that India would be very concerned if China were to allow a major devaluation in the yuan currency, adding that he doubted Beijing would allow this to happen. He also said that the strength of the Indian rupee against many currencies had contributed to the weak export performance of Asia's third-largest economy. On the global front, Asian markets bounced back in afternoon trade, European equities too bounced back from 13-month lows on Tuesday. Back home, the frontline indices sooner than later capitalized on the momentum and crossed the psychological 24,400 and 7,400 levels. Thereafter, the indices kept oscillating in a narrow range through the day’s trade. However, hefty short covering in the late hours helped the indices to bounce to higher levels but mild resistance around the 24,500 and 7,450 levels pushed the key gauges back to a small extent by the end of trade. Finally, the BSE Sensex gained 291.47 points or 1.21% to 24479.84, while the CNX Nifty ended up by 84.10 points or 1.14% to 7,435.10.