Markets to continue the somber run, may get some respite in latter trade

The Indian markets before going for a holiday had extended their sharp losses and major benchmarks lost over one and half a percent in the last session. Today, the start is likely to remain somber on weak global cues and traders will be reacting to mixed set of economic numbers announced on Monday after the market hours, while on positive side India's annual retail inflation eased by 100 basis points to 5.05 percent in August. While on the negative, factory output again dipped to a negative growth of (-)2.4 percent in July from an expansion of 1.95 per cent in the month before, dragged down by a negative growth of (-)3.4 percent in the manufacturing sub-index, which enjoys the maximum weight in the main index. Meanwhile, India Ratings and Research has said that the sharp fall in retail inflation in August has increased the chances of monetary easing by the central bank. The rate sensitive sectors are likely to see some action on hopes of rate cut. Markets may get some support with a survey report stating that implementation of Goods & Service Tax (GST) will lead to increased tax compliance and attract more foreign direct investments across sectors due to tax transparency and ease of doing business. There will be some buzz in oil & gas sector too, as the global rating agency Fitch ratings has said that after growing at a robust 7.8 percent in first quarter, India's fuel consumption growth is likely to moderate at around 5-6 per cent in the current fiscal.

The US markets recovered from the lows but still ended the last session notably lower on continued uncertainty about the outlook for interest rates amid lack of lack of major US economic data for the day. The Asian markets have made mostly a lower start and some indices are again down by half to one percent on dollar strength with prospect of global central banks turning less accommodative.

Back home, Indian benchmarks started a new week on a devastating note as they went on to extend the declining streak for the second successive session, investor sentiment was rattled by concerns that the US Federal Reserve could be considering an imminent interest rate hike. The frontline indices shaved off over one and half percent and breached 28,400 (Sensex) and 8,750 (Nifty) levels on the downside. Adding anxiety among market patients a private report indicated that the Bank of Japan was considering ways to steepen the Japanese yield curve, along with worries that central banks more generally were running short of fresh stimulus options. On the domestic front, sentiments were undermined by the report that the monsoon weakened in most parts of the country this month, taking the season's total rainfall to 5 per cent below normal. September rainfall has been 19% lower than normal, except in east and northeast India, where it was 66% in excess. All other regions reported a deficit of 40%-50% this month. Besides, factors like depreciation in rupee values against the dollar and FIIs outflow in the previous session, also weighed on the sentiment, extending losses for the third straight session on fresh buying of the American currency by banks and importers. Investors also turned cautious ahead of macroeconomic data-IIP for July and inflation data for August-scheduled to be released later in the day. Meanwhile, some telecom operators like Bharti Airtel and Idea Cellular came under pressure after Trai decided to reject the demand of incumbent mobile operators such as Bharti Airtel, Vodafone and Idea Cellular for an increase in the fee that they charge from Reliance Jio to terminate its calls on their networks.  The regulator has also asked the incumbent operators to provide requisite number of interconnect points to Jio at the earliest and ensure that consumers are not put at an inconvenience due to lack of connectivity. Further, Fertiliser stocks slipped after government scraped rule that required actual user as a condition for import of industrial or technical grade urea. Finally, the BSE Sensex declined by 443.71 points or 1.54% to 28353.54, while the CNX Nifty dropped 151.10 points or 1.70% to 8,715.60. Indian markets remained closed on Tuesday on account of Id-Ul-Fitr.