Markets to make a soft-to-cautious start on weak regional cues

The Indian markets managed to end the final day of the last week on a positive note, on hopes of another rate cut after decline in inflation. Today, the start of the new week is likely to be cautious tailing the weakness in regional markets, though there is not much on the economic front traders will be eyeing the earnings of important companies to get cues. Markets may get some support in latter trade with Prime Minister Narendra Modi’s assertion that results of the reforms undertaken by his government were visible and the country has transformed into 'one of the most open economies' in the world with a strong growth rate. Meanwhile Prime Minister has urged BRICS business to work with members to boost trade and said that we count on the BRICS Business Council to work with us to achieve our common aim of strengthening mutual trade, enhancing business opportunities, building investments linkages, promoting innovation and removing bottlenecks to intra-BRICS commerce. There will be some buzz in the banking sector on report from the Reserve Bank of India (RBI) that Indian banks' loans rose 10.4 percent in two weeks to September 30 from a year earlier. The PSU oil marketing companies will be in action as petrol price has been hiked by Rs 1.34 a litre, the fifth increase in two months, and diesel by Rs 2.37 a litre on back of spike in global rates. There will be some important earnings announcements, DHFL, Orient Paper, UltraTech Cements, Zensar Technologies etc will report their numbers.

The US markets made a modestly positive close in last session, but failed to sustain the early rally mood, on remarks by Federal Reserve Chair Janet Yellen at a Boston Fed conference. The Asian market have made mostly a lower start, as the dollar strengthened after Federal Reserve Chair Janet Yellen hinted that the U.S. economy may be allowed to run hot. 

Back home, Indian stock market ended on a positive note as investors remained optimistic on hopes of further rate cuts by the central bank after data showed that inflation based on consumer price index dipped to 13-month low in September. Data released by the statistics office showed consumer inflation at 4.31% in September compared with 5.05% in August and 6.07% in July. The decline was due to a steep drop in food inflation to 3.88% in September from 5.91% in August. The data raises hopes of more rate cuts as the outlook for inflation is benign for about six months and there’s good chance consumer inflation will stay below RBI’s 5% target for March 2017. Adding to the confidence among market participants, India’s Wholesale Price Index (WPI) in the month of September 2016 also softened to 3.57 percent compared to 3.74 per cent in the previous month. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. Meanwhile, result session of Q2FY17 has started on mixed note as TCS reported better than expected profit, but its revenue growth remained a drag, while Infosys posted strong set of number, but cut its financial-year revenue growth target for the second time in three months on an uncertain business outlook. Banking stocks edged higher after the central bank allowed banks to classify government securities borrowed from the central bank in the daily liquidity adjustment facility (LAF) under the statutory liquidity ratio (SLR), making liquidity management for banks easier, while Cement stocks surged on the report that cement demand in the country is expected to touch 8 per cent in financial year (FY) 2017-18, helped by government's push to the infrastructure sector. Finally, the BSE Sensex gained by 30.49 points or 0.11% to 27673.60, while the CNX Nifty rose 10.05  points or 0.12% to 8,583.40.