Markets to remain in somber mood on mixed global cues

The Indian markets fell further in the last session and the major averages lost another about a percent over fiscal deficit concern, after reports emerged that the government is planning a big stimulus. Today, the start is likely to remain cautious tracking mixed global cues, also as the rupee crashed to a six-month low at 65.12 to the dollar in last session, however, traders will be getting some support with Prime Minister Narendra Modi constituting an Economic Advisory Council in a bid to bring in economic reforms. NITI Aayog member and a former professor at the Centre for Policy Research, Bibek Debroy has been appointed as Chairman of Economic Advisory Council. It will address issues of macroeconomic importance' and present its views to the prime minister. Meanwhile, Finance Minister Arun Jaitley has said that government is planning measures to revive economic growth. There will be buzz in the auto sector, as the Road Transport and Highways Minister Nitin Gadkari has hinted that automobile industry could continue exports of petrol and diesel cars even as government will go ahead with its plan to transition India to all-electric mobility by 2030.

The US markets continuing their sluggish trend ended lower in the last session, with the tech-heavy Nasdaq showing a particularly steep decline, amid geopolitical concerns after North Korean Foreign Minister Ri Yong Ho claimed recent comments by President Donald Trump represent a 'declaration of war.' The Asian markets have made a mixed start with some indices trading in red after a fresh trigger from North Korea sent investors back into haven assets, with focus returning to comments from central bank policy makers.

Back home, Indian equity markets came under the bear’s grip on Monday with frontline gauges breaching their crucial 9,900 (Nifty) and 31,700 (Sensex) levels on subdued global cues. Markets started the session with a huge gap on the down side, as investors turned jittery on expectation of government to tinker its fiscal deficit target for FY18 by announcing an economic stimulus to revive the economy. Chief Economic Adviser (CEA) Arvind Subramanian has said that Indian economy continues to face multiple challenges and stressed on the need to tackle them on various fronts, such as exchange rate, public investments while maintaining macroeconomic stability. He said that there are lots of challenges ahead with growth slowing down and investment not picking up. He also identified rising level of stressed assets to be a key area of concern. Traders also remained cautious on account of the derivatives expiry due on Thursday and the recent spike in tensions on the Korean peninsula. Adding to the pessimism, foreign investors remained in exit mode as they have already pulled out nearly Rs 5,500 crore from stock markets so far this month due to geopolitical concerns and a tendency to take profit. The net outflow by Foreign Portfolio Investors (FPIs) follows withdrawal of Rs 12,770 crore from equities in August. Prior to that, they had pumped in over Rs 62,000 crore in the past six months. Markets extended southward journey and domestic bourses even went to test psychological 31,500 (Sensex) and 9,850 (Nifty) levels, but the key gauges got some support near those intraday low levels as they managed to trim some of their losses to end off day’s lows, as traders took some solace with report that Prime Minister Narendra Modi would unveil the much-awaited stimulus package during a scheduled speech to the BJP national executive meeting later in the day. Finally, the BSE Sensex tumbled 295.81 points or 0.93% to 31,626.63, while the CNX Nifty was down by 91.80 points or 0.92% to 9,872.60.