Markets to make a cautious but positive start

The Indian markets showing a downward trend ended lower in last session after a weak services sector data. Today, the start is likely to be in green but cautiousness may prevail lacking any major supportive cues.  Also, as the RBI Governor Urjit Patel signaled a marked departure in policy approach from his predecessor’s unwavering focus on price stability. He said that 'The NPA situation is an important issue for the RBI in India. We will be dealing with it with firmness but also with pragmatism so that the economy does not feel any lack of credit.' Rate-sensitive stocks will be in action after Bank of India, Syndicate Bank and Punjab National Bank reduced their lending rates following RBI's decision to lower policy rates. The PSU oil marketing companies too will keep buzzing with international crude prices surging by 2 percent overnight. Sugar stocks will be in focus on reports that the government is keeping a close watch on prices of sugar, pulses and edible oils to check hoarding and ensure adequate availability in the market in the festival season.

The US markets after showing some weakness in last two sessions rebounded in last session and all the major indices posted gains of about half a percent, following the release of a slew of U.S. economic data including substantial acceleration in service sector growth. The Asian markets have made mostly a positive start tailing gains in US markets and pickup in oil prices. The Japanese market was up despite slight strength in yen.

Back home, Wednesday turned out to be a weak day for the Indian equity indices, which got pounded by over quarter percentage on feeble global cues. Domestic sentiment was hit as US equities ended lower in wake of a report that the European Central Bank could start winding down its quantitative-easing program ahead of schedule. Through, the domestic indices ended the session in negative territory, it was more or less stable day as the indices remained in tight range below neutral line with minute losses for most part of the session as a drop in Banking, information technology (IT) and Oil & Gas counters were offset by some gains in Realty, Metal and Auto stocks.  Good buying was witnessed in select mid-cap and small-cap stocks. Steel stocks edged higher after the government extended the minimum import price (MIP) on 66 steel products by another two months to protect the industry against cheap imports. Telecom stocks remained on buyers' radar on the reports that spectrum auction received additional bids worth Rs 3,100 crore on the third day to take total commitments to Rs 59,981 crore, leaving two-thirds of total quantum of on-offer airwaves unsold as bidders stayed away from high-cost 700 Mhz and 900 Mhz bands. Further, Tyre and Paints stocks too remained in focus on expectation of healthy earnings growth for the quarter ended September 2016. Investors got some disappointment with slower growth in the services sector in September as pace of new orders moderated amid competitive pressure and unfavourable weather conditions. The widely tracked Nikkei India services Purchasing Managers Index (PMI) which tracks services sector companies on a monthly basis, stood at 52 in September, down from the 43-month high of 54.7 in the previous month of August 2016. Adding anxiety among market patients World Bank came up with report indicating that automation threatens 69 per cent of the jobs in India, while 77 percent in China. However, sentiments got some support as International Monetary Fund (IMF) in its latest assessment of global growth said India’s economy is recovering strongly, bumping up the country’s growth forecast for the current and next year as it warned of subdued global growth that could fuel protectionism. The IMF now expects the economy to expand 7.6% in 2016-17, up from its earlier projection of 7.4%. Finally, the BSE Sensex declined by 113.57 points or 0.40% to 28220.98, while the CNX Nifty dropped 25.20 points or 0.29% to 8,743.95.