Markets to make a soft-to-cautious start of the new series

The Indian markets bounced back in second half with lots of short covering appearing towards the expiry of the October F&O series and ended with modest gains. Today, the start of the new series will remain cautious and traders will be opting selective bets lacking any major cues amid mixed global trade. Some support may come with Finance Minister Arun Jaitley's statement that the economic situation in Asia is not as pessimistic as the rest of the world, and it has a higher growth potential. Though, he also said India will have to undergo rapid urbanisation in the next two decades and conceded that management or urban infrastructure, especially of water will become a serious challenge. The PSU stocks will be in action, as the cabinet on Thursday gave in-principle approval to strategic stake sales in some state-owned companies on the recommendations of the government think tank NITI Aayog. The sugar stocks too may show reaction to government’s decision to extend stock limits on sugar traders by another six months till April 2017 in order to check sweetener prices, which at present are ruling around Rs 40 per kg. There will be lots of earnings too to keep the markets buzzing.

The US markets closed mostly lower in last session, as traders digested the latest batch of earnings news, with a slew of well-known companies releasing their quarterly results. Traders largely ignored the report of Labor Department showing a modest drop in initial jobless claims in the week ended October 22nd. The Asian markets have made a mixed start amid speculation major central banks are moving closer to reining in stimulus, however the Japanese market rallied with gains of about half a percent as the yen traded near its weakest level since July.

Back home, Indian equity markets that started the session on a sluggish note managed to eke out modest gains by the end of trade, as the benchmark indices clawed back into the green terrain in the last leg of trade on account of renewed buying interest by traders to square off F&O positions on expiry of October series. Sentiments got some support with report that Prime Minister Narendra Modi has asked secretaries at the Centre and chief secretaries in the state to analyse the World Bank's Ease of Doing Business Report. Modi's remarks came hours after commerce and industry minister Nirmala Sitharaman said she was disappointed that the efforts and reforms undertaken by the Centre and the states had not been adequately captured. Sitharaman further added that the government intends to achieve the prime minister’s vision of ensuring that India finds a place in the top 50. Further, indicating a sense of confidence among global investors, latest data from the SEBI showed that more than 1,300 new foreign portfolio investors (FPIs) have registered with capital markets regulator SEBI in April-August of 2016-17, showing a sign of their willingness to be part of India’s growth story. In the last fiscal, a total of 2,900 FPIs had received approval from SEBI. The number of FPIs with SEBI approval increased to 5,626 at the end of August from 4,311 in March-end, reflecting an addition of 1,315 such investors. FPI investors consider India as a preferred and stable market, given its macro-economic stability, long-term growth prospects and ongoing economic and social reforms. However, gains remained capped with the report that the Reserve Bank may not be able to achieve its medium term target of 4% inflation, even if food prices are managed as health and education prices could play spoil sport. Besides, disappointing earnings by some heavyweights and weak trade in other regional markets too weighed on market sentiment. On the global front, Asian markets ended mostly lower on Thursday as investors awaited a fresh batch of data for indications on the state of the world economy, while European stocks edged lower in early trade. Back home, finally, the BSE Sensex gained 79.39 points or 0.29% to 27915.90, while the CNX Nifty ended flat at 8,615.25.