Markets to make a soft start tailing weak global cues

The Indian markets ended flat on the back of profit booking by investors in last leg of trade as investors at large remained reluctant to build on long positions ahead of US elections. Today, the start is likely to be in red with markets following the footsteps of their Asian counterparts. Some support may come with ASSOCHAM’s report that Indian economy is expected to fare better in the second half of the current fiscal backed by uptick in sales and improved capacity utilization, though fresh investments and new jobs creation may be a concern going forward. Meanwhile, Assocham has made a pitch to Finance Minister Arun Jaitley not to levy cess, but hike GST rate by 1-2 per cent to garner additional resources to compensate states for any revenue loss on rollout of the new regime from April next year. The telecom stocks will be in action, as the Department of Telecommunications (DoT) is now looking to herald second generation reforms like simplifying licences and launching electromagnetic field (EMF) portals to help people test the level of radiation from towers. There will be lots of earnings too to keep the markets buzzing.

The US markets closed in red terrain in last session, as tightening polls just a week before the US presidential election dampened sentiments and investors rethought their long-held bets on a Hillary Clinton victory. The Asian markets have made a subdued start with all the regional counters were trading in red, with major indices reeling with a cut of over a percent, as the acrimonious US presidential election campaign entered its final week. Traders shrugged off stronger-than-expected factory growth in China. Activity in China’s manufacturing sector expanded at a faster pace than expected in October, adding to views the world’s second-largest economy is stabilising thanks to a construction boom.

Back home, Indian stock markets finished the session on a dull note, as investors at large remained reluctant to build on long positions ahead of US elections which is due next week and US Federal Reserve meeting which starts today. Sentiments remained down-beat with the repot that the Centre’s fiscal deficit ballooned to 83.9 per cent of the Budget Estimates (BE) in the first half of 2016-17, the highest in the first six months of a financial year since 1998-99, on account of elevated capital spending and higher salaries outgo. On revenue side, lower realisations from disinvestment and other streams hurt the exchequer. In absolute terms, fiscal deficit, the gap between expenditure and revenue, in first half of the current financial year was Rs 4.48 lakh crore. However, the downside risk for the frontline indices was limited by reports that manufacturing sector growth in India hit a 22-month high in October, driven by a sharp and accelerated increase in new orders, purchasing activity and output. The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) - a gauge of manufacturing performance - rose to 54.4 in October from 52.1 in September, indicative of a robust improvement in manufacturing business conditions in the country. Some support also came with the report that core sector output rose to three months high by 5% in September, compared to growth of 2.4% in the year-ago period, on the back of a sustained growth in the steel sector and a rise in refinery products. Also, a private report has said Indian economy is expected to fare better in the second half of the current fiscal backed by uptick in sales and improved capacity utilisation, though fresh investments and new jobs creation may be a concern going forward. Meanwhile, Metal and mining stocks gained traction after the release of encouraging purchasing managers index data from China, the world's largest consumer of steel, copper and aluminum. Further, mixed reactions were witnessed in auto companies stocks after reporting October sales numbers. Maruti Suzuki India has registered a fall of 0.3% in its total car sales (Domestic + Export) for the month of October 2016 at 133,793 units, as against 134,209 units in October 2015. Ashok Leyland has reported an increase of 28% in October 2016 sales to 12533 units, as against 9803 units sold in the same period of last year. Finally, the BSE Sensex declined by 53.60 points or 0.19% to 27876.61, while the CNX Nifty up 0.55 points or 0.01% to 8,626.25.