Markets to make a flat-to cautious start of the Diwali week

The Indian markets were in consolidation mood and ended marginally lower in the last session, today, the Diwali and the F&O expiry week is likely to get a mildly positive start though the trade is likely to remain choppy. Traders will get some support with Prime Minister Narendra Modi’s statement that the Goods and Services Tax law will boost domestic demand, create more opportunities for domestic business and drive job creation. He said that India is the fastest growing major economy, and one of the most attractive destinations for FDI. There will be some buzz in the banking sector stocks, as the Finance Ministry has called a meeting with senior managers of banks to discuss the bad loans problem existing in specific sectors. The agenda of meeting will be focussed on non-performing assets (NPAs) in sectors like steel, power and infrastructure, so these sectors too will be in action. Meanwhile, industry body Assocham has said that it had earlier cautioned for card frauds, after the unprecedented security breach reported earlier this week. There will be some buzz in the aviation sector too, as the Directorate General of Civil Aviation (DGCA) and the Bureau of Civil Aviation Security (BCAS) all set to get powers to impose fines on violators. While in other development, carriers from the gulf region have shown interest in launching regional airlines to implement the regional connectivity scheme. There will be lots of earnings announcements too keep the markets in action.

The US markets despite recovery ended flat with a negative bias, though the tech heavy Nasdaq ended higher and all the three indices snapped the weekly declining streak, amid mixed corporate earnings. The Asian markets have made mostly a positive start, though the gains are muted as investors weighed prospects for a US interest-rate increase, and as a report showed China’s capital outflows are picking up.

Back home, After ginning some strength in last session, Indian stock markets once again turned lower and finished the Friday’s session on a dull note, marginally below the neutral line as investors at large remained reluctant to build on long positions amid weak trade in regional markets. The session largely remained characterized by choppiness as the aimless indices moved only slowly towards the previous closing levels after the early decline. Sentiments were undermined by the SBI’s report indicating that manufacturing growth is likely to remain flat and factory output may even continue to remain in the negative territory in the coming months. The yearly SBI Composite Index for October remained stationary at 50.2, compared to September. The monthly index declined marginally to 52.1 in October from 52.6 in September. The report also noted that credit off-take on a year-on-year basis continues to be a laggard and stood at 10.4 per cent in September 30, 2016. Investors also remained cautious with the Moody's report that there has been a large-scale decline in private investment in PPP projects in recent years because of delays in project approvals and land purchases by the government, complicated dispute resolution mechanisms in the concession agreements and lower than expected revenues due to aggressive assumptions. There were mostly stock specific activities based on earnings. Biocon hit a fresh record high of Rs 1020, after the company posted robust 52% year on year (YoY) jump in consolidated net profit at Rs 147 crore for the quarter ended September 30, 2016, led by the company’s biologics, small molecules businesses and Syngene.  Also, HCL Technologies rallied after the company maintained constant currency guidance at 12-14% for FY17. On the flip side, ACC came under pressure after posting 29% fall in consolidated net profit at Rs 82 crore for the quarter ended September 30, 2016. The company’s Sales turnover during the quarter under review declined 9.7% to Rs 2473 crore against Rs 2,740 crore in the corresponding quarter of previous year. Finally, the BSE Sensex declined by 52.66 points or 0.19% to 28077.18, while the CNX Nifty dropped 6.35 points or 0.07% to 8,693.05.