Markets to get a flat-to-cautious start on geopolitical concern

The Indian markets hit the record highs in the last session on some encouraging quarterly earnings and favorable comments on the Indian economy from the World Bank and IMF. Today, the start of the day is likely to be marginally in green but there will be some cautiousness too with the flare up of geopolitical tension after North Korea's deputy U.N. ambassador warned a nuclear war may break out any moment. On the domestic front traders will be getting some support with statement of  NITI Aayog Vice-Chairman Rajiv Kumar, who has pitched for fiscal stimulus to boost growth with a rider that additional expenditure should be used only for increasing productivity and capital expenditure. He said that faced with slowing economic growth, the industry has been clamouring for a stimulus package from the government. Meanwhile, the International Monetary Fund has suggested India to consider setting up an independent fiscal council, saying this institution has contributed to better outcomes in the countries where it has been introduced. Pharma stocks are likely to be under pressure on a proposed amendment to the four-year-old Drug Price Control Order (DPCO), which aims to bring non-scheduled drugs under price control by changing the price setting method.

The US markets extended their gains in last session and with the continued upward move, the major averages once again climbed to new record closing highs. However, traders were reluctant to make significant moves ahead of key earnings news later this week. The Asian markets have made a mixed start with some indices trading marginally in red in early deals, as concerns about North Korea reemerged, while the Japanese market was up on speculation that the next head of the Federal Reserve will be more hawkish.

Back home, Indian equity benchmarks started the Diwali week on a very strong note, with Sensex and Nifty hitting all time highs and ending above their crucial 32,600 and 10,200, respectively for the first time ever. Markets started the trade with gap-up opening, as sentiments remained jubilant with report that India’s exports recorded a robust growth of 25.67 percent to $ 28.61 billion in September, mainly on account of rise in shipments of engineering, chemicals, and petroleum products. Imports too rose by 18.09 percent to $ 37.59 billion in September from $ 31.83 billion in the year-ago month and the trade deficit narrowed to 7-month low of $ 8.98 billion in the month under review from $ 9.07 billion in September 2016. Some support also came with IMF chief Christine Lagarde’s statement, who just days after the International Monetary Fund (IMF) slashed India’s GDP growth rate to 6.7 percent in 2017, slower than the 7.2% it had forecast in April, said that the Indian economy is on a firm footing. Traders booked most of their initial gains in afternoon session, but fresh amount of buying in late trade helped markets to end near intraday high levels. Sentiments turned positive with data showing that India’s annual wholesale price inflation (WPI) eased to 2.60% in September from the provisional 3.24% in the previous month. Build up inflation rate in the financial year so far was 0.97% compared to a build up rate of 3.44% in the corresponding period of the previous year. Adding to the optimism, Niti Aayog Vice Chairman Rajiv Kumar said that slowdown in India's economic growth that began in 2013-14 has bottomed out and Gross Domestic Product (GDP) is likely to grow 6.9 to 7 percent in the fiscal 2017-18 and 7.5 percent in 2018-19. Traders also took some support with the private report indicating that India’s economy will grow by more than 10% annually in the coming decade, buoyed by demographics, reforms and globalization. Finally, the BSE Sensex surged 200.95 points or 0.62% to 32,633.64, while the CNX Nifty was up by 63.40 points or 0.62% to 10,230.85.