Markets to continue the decline with a soft start

03 Nov 2016 Evaluate

The Indian markets suffered sharp setback in last session and the major benchmarks deposed over a percent in a broad based selling, mainly on US election jitters. Today the start is likely to be somber again tailing the weak global cues. Also, there is a big setback with global rating agency Standard & Poor's retaining India's rating at BBB- and ruling out any upgrade in India's sovereign rating through 2017 despite policy stability and reforms. S&P maintained the lowest investment grade rating of 'BBB-' with a 'stable' outlook saying it wants to see more efforts to lower government debt to below 60 percent of GDP and that it did not expect revenues to rise enough to meaningfully lower the deficit over the medium term. There will be some concern with GST Council meet starting today as both the Centre and states seeming to harden their positions with respect to the issues they disagree on. There is a raging debate on the Centre’s proposal for having multiple rates for GST. Though some support can come with a survey of Federation of Indian Chambers of Commerce and Industry (Ficci), which has said that India Inc believes the economy is faring better and is optimistic about demand rising. Expectations regarding the performance of the economy in the next six months went up, with about 75 per cent positive on growth, up from 66 per cent. There will be some buzz in the banking stocks with two major lenders State Bank of India (SBI) and ICICI Bank cutting their respective lending rates for home loans to boost housing credit during the festive season. There will be lots of earnings announcements too, to keep the markets in action.

The US markets once again ended lower in last session with some polls confirming tightened presidential race days ahead of the election and Federal Reserve’s signal that an interest rate hike is imminent. The Asian markets have made mostly a weak start and some of the indices were down by over a percent in early deals on concern of rate hike in US.

Back home, Wednesday’s session turned out to be a dreadful session for the Indian equity markets as the benchmark equity indices got bludgeoned by over a percent in the session. The wretchedness in the global markets got transmitted into the domestic frontline indices as a new poll showing Republican candidate Donald Trump leading the US presidential race spooked investors. Polls suggest a tight neck-to-neck race between the two candidates, following last week's news that the FBI had opened a new investigation into Clinton's private email server. Another cause for concern is crude oil prices, which declined for the fourth straight day on expectations that U.S. crude inventories were bolstered significantly last week. Crude oil price has always had a positive correlation with global equities. Investors are also cautious as the US Federal Reserve is due to announce its latest monetary policy decision later in the day. On the domestic front, sentiments were undermined by the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 123.96 crore on November 01, 2016. Depreciation in rupee against dollar also weighed down sentiments. Meanwhile, Standard & Poor’s affirmed India’s sovereign ratings, welcoming the country’s policy stability and improved monetary credibility, but ruled out any upgrade for this year or in 2017 because of weak public finances and low per capita income. The global rating agency has stuck to its rating of ‘BBB-’ with a ‘stable’ outlook, saying it would need to see more efforts to lower the country’s net general government debt level to below 60% of gross domestic product. The ratings agency also expressed concerns that government could delay subsidy cuts, while noting the country’s banking sector would likely need capital infusions of about $45 billion by 2019, or 2% of the country’s GDP, to meet global Basel III capital norms. Market participants also overlooked 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. Finally, the BSE Sensex declined by 349.39 points or 1.25% to 27527.22, while the CNX Nifty dropped 112.25 points or 1.30% to 8,514.00.

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Name of the IA registered with SEBI:	The Alchemists Ark Pvt. Ltd.
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SEBI Registration Number:	INA000013323 Validity - May 16, 2019 - Perpetual
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Grievance Officer:

Name: Mukta Vaze

Email: mukta.vaze@moneyworks4me.com

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Name: Atharva Bhide

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Mobile No:+91 91758 99463

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