Markets to make a positive start of the crucial week

The Indian markets recovering from the day’s low managed a modestly positive close in last session, today the start of the crucial week when the policy rates will be decided is likely to be in green on supportive global cues. Traders will also be getting some support with India’s core sector output rising to 3.2% in August on the back of sharp rise in steel production and a pickup in cement, suggesting a lift in infrastructure and construction activity. Steel production rose 17% to a 37-month high, aided by the low base of last year. There is another major positive for the markets, foreign investors making it the highest net inflow in 11 months, pumped in more than Rs 20,000 crore into the capital market in September. Meanwhile, noted economist Kaushik Basu has warned against low interest regimes and the rich countries following “foolish policies” like protectionism even as he asserted India stands out with a growth rate of over 7 per cent. The power, fertilizer and CNG suppliers will be in action, as price of natural gas for all these sector have been cut by 18 percent to $2.5 per million British thermal unit, it’s the fourth reduction in 18 months. The PSU stocks too will be in action on report that the government is preparing a plan for big-ticket asset sales that involves the disposal of controlling stakes in 22 listed and unlisted companies as the Centre looks to meet the full-year disinvestment target of Rs 56,500 crore.

The US markets surged in last session with major indices gaining about a percent each after the recovery in German lender and oil prices. The Asian markets have made a positive start with some indices showing gains of over a percent on ebbing concern about Deutsche Bank AG’s finances, though many of the markets in the region are closed today.

Back home, Indian equity markets showcased a lackadaisical performance on the first day of a new F&O series, as sentiments were marred by the looming pessimism about geo-political tension arising between India and Pakistan after the Indian Army conducted surgical strikes across LoC in Pakistan on Wednesday night.  The last trading day of September was characterized by high amount of volatility and the indices failed to protect their important psychological 8,600 and 27,900 levels. Though the key indices ended on positive note, they oscillated in an extremely tight range through the session, as market participants remained on the sidelines lacking conviction amid the persistent worries over global markets. Investors’ morale was dampened  with report that unemployment rate in India has shot up to a five-year high of 5 percent in 2015-16, with the figure significantly higher at 8.7 percent for women as compared to 4.0 percent for men. However, good buying was observed in final hours of trade on speculation that slowing inflation will allow new Reserve Bank of India (RBI) governor Urjit Patel to cut interest rates at next week’s monetary policy review.  Some support also came with the report that Employees’ Provident Fund Organisation (EPFO) has decided to invest 10% of its annual incremental deposits or an estimated Rs 13,000 crore in the current fiscal in equity exchange traded funds (ETFs). Also, GST Council chaired by Union Finance Minister Arun Jaitley was meeting and will finalise the rules regarding registration, refunds and payment and also take a view on exemption of goods under the upcoming Goods and Services Tax (GST) regime. It will also deliberate on a formula for payment of compensation to states for revenue loss in the aftermath of implementation of the GST. Meanwhile, Liquor stocks rallied after the Patna HC struck down the Bihar Prohibition of Liquor Act, calling it illegal. The ruling comes only five months after the Nitish Kumar government decided to impose a total ban on alcohol in towns and cities. Further, rate sensitive sectors like Banking, Realty and Auto also observed good buying on the expectations of rate cut in upcoming monetary policy meeting. Finally, the BSE Sensex gained 38.43 points or 0.14% to 27865.96, while the CNX Nifty ended up by 19.90 points or 0.23% to 8,611.15.