Markets to make positive start on Wednesday

Late hour buying mainly helped the Indian markets to end near intra-day high level on Monday amid rise in India’s manufacturing sector activity in September. Rally in banking and finance sector stocks also supported markets to recover from day’s low. Today, the markets are likely to make positive start but there may be some cautiousness ahead of the Reserve Bank of India’s monetary policy review later this week. Investors will be eyeing Services PMI data for the month of September to be out on October 04. Traders will be getting encouragement with the Commerce Ministry focusing on nine sectors, including pharma, food processing and textiles, to boost exports in the current fiscal. The ministry is targeting a minimum growth rate of 16% in exports this fiscal. Also, traders will be getting some support with report that the finance ministry expects the GST collections to cross Rs 1 lakh crore in November and December on account of festive season demand and the anti-evasion measures initiated by the revenue department. However, there will be some cautiousness with the government data showing that the growth of eight core sectors slowed to 4.2% in August, due to fall in output of crude oil, petroleum product and fertiliser. Besides, retail inflation for industrial workers rose to 5.61% in August from 2.52% in the year-ago month mainly due to rise in prices of food items and petroleum products. There will be some buzz in the power sector stocks with report that power tariff touched a decade high of Rs 18 per unit in the spot market on Tuesday due to low hydro and wind energy production and coal shortage at thermal plants. Also, there will be some reaction in steel sector stocks with report that the Centre will examine a proposal by the steel ministry to first merge the loss-making steel firm Neelachal Ispat Nigam (NINL) with Rashtriya Ispat Nigam (RINL) and then merge it with Steel Authority of India (SAIL) to create a single state-owned steel manufacturer to bring in efficiency.

The US markets ended mostly lower on Tuesday as investors shift focus to slowing growth prospects, US-China trade dispute, amid fading NAFTA deal sentiment. Asian markets were trading mixed on Wednesday following a volatile US session as investors weighed continuing concerns in Indonesia and Italy and strength in commodity prices.

Back home, snapping three days of losing streak, Indian equity benchmarks ended the Monday’s trade in green terrain with frontline gauges reclaiming their crucial 36,500 (Sensex) and 11,000 (Nifty) levels. After a weak start, the key indices remained lackluster for the most part of the trading session, impacted by India Meteorological Department’s (IMD) report stating that at the end of the four-month-long monsoon season this year, the rainfall recorded in the country as a whole has remained 9% short of the normal mark. Domestic sentiments were also pessimistic with the RBI’s report stating that India’s external debt declined 2.8% to $514.4 billion at June-end over the previous quarter on account of a decrease in commercial borrowings, short-term debt and non-resident Indian (NRI) deposits. Some concerns also came with a report that overseas investors pulled out a massive Rs 21,000 crore ($3 billion) from the capital markets in September, making it the steepest outflow in four months, on widening current account deficit amid global trade tensions. However, the last hour buying by the traders coupled with positive macroeconomic data helped the key indices to recover their losses. Business activity in Indian manufacturing sector picked up in the month of September 2018, amid firmer gains in new orders, output and employment. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 52.2 in September from 51.7 in August. Besides, Goods and Services Tax (GST) mop-up rose to Rs 94,442 crore in September, from Rs 93,690 crore in the previous month. Adding some relief, ASSOCHAM’s latest report showed that India’s exports hold a promising outlook, with the US economy growing at its best in four years coupled with the rupee depreciation leading to enhanced net revenue realizations. The market participants took some support with the joint report between the International Monetary Fund (IMF), World Trade Organization (WTO) and World Bank stating that India's economic reforms and growth story provides compelling indication that openness in services contributes to long run growth performance. Finally, the BSE Sensex gained 299.00 points or 0.83% to 36,526.14, while the CNX Nifty was up by 77.85 points or 0.71% to 11,008.30.