Markets to see some recovery on positive regional cues

The Indian markets losing their momentum in the second half declined by around half a percent in last session, tracking weak cues from Asia and Europe. Today, the start is likely to be in green tailing the regional markets. Also, a private report has said that India’s current account deficit is likely to stay below 1 per cent of GDP this year, largely due to a sharp fall in the trade deficit as against last year. Marketmen will be eyeing the crucial three-day meeting of the all-powerful GST Council, starting today, which will decide on the tax rate and sort out issues like compensation formula for rollout of the new indirect tax regime from April 1, 2017. There will be some buzz in the PSU stocks, as  the cabinet is expected to clear the plan to cut majority stake in around 20 state-run firms on Wednesday, including several profit-making entities, signaling a restart of equity sale in public sector companies after a 12-year gap.  Consumer goods stocks too may see some action on an Assocham report that riding high on an uptick in the economy and improving perception of job prospects, coupled with steady lowering of interest rates, consumer demand may soar 40 percent in the ongoing festive season.

The US markets made a lackluster start of the new week and ended modestly lower in the last session and the major averages fell to their lowest closing levels in a month, on getting some weak economic data. The Asian markets have made mostly a positive start on hopes that US monetary policy will remain accommodative after some disappointing economic data including a smaller than expected increase in industrial production in September.

Back home, lower earnings guidance from IT majors, along with heightened chances of a US rate hike dragged the Indian equity markets lower on Monday. Besides, weak trade in Asian markets, hike in petroleum product prices and a massive outflow of foreign funds during the last week eroded investors’ confidence. Investors remained cautious over weakness in the rupee against the dollar after the country’s foreign exchange reserves declined by a whopping $4.343 billion to $367.646 billion in the week to October 7, 2016. Indian rupee weakened by 12 paise to trade at 66.83 against the US dollar at the time of equity markets closing. Also, a study claimed that as many as 550 jobs have disappeared every day in last four years and if this trend continues, employment would shrink by 7 million by 2050 in the country. However, major losses were restricted 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. Some support also came with report that India’s export during September 2016 has shown sign of revival, registering a growth of 4.62 per cent in dollar term to $22.88 billion as compared to $21.86 billion in September 2015. On the global front, Asian markets ended mixed on Monday, as investors avoided taking risks, while European markets started the week on softer note as investors remained cautious ahead of earnings. Back home, after starting the session on cautious note, the local benchmarks continued to trade near neutral line throughout the morning session as investors await key earnings for further signs of economic revival. However, sharp selling observed in noon session, which led to benchmark indices falling for the lowest point of the day as selloff in Chinese shares raised concerns around global growth. Some late short covering in blue-chip ensured that local bourses go home with relatively small losses. Finally, the BSE Sensex declined by 143.63 points or 0.52% to 27529.97, while the CNX Nifty dropped 63 points or 0.73% to 8,520.40.