Markets to make gap-down opening; TCS result eyed

Bulls made a strong comeback, after witnessing half a percent cut in previous session, as both Sensex and Nifty ended day with over a percent gains amid the rupee recovering from record lows coupled with expectations of robust corporate earnings for the second quarter ended September 2018. Today, the markets are likely to make a gap-down opening on weak global cues. There will be some cautiousness with a private report stating that private equity and venture capital (PE/VC) investments in India declined 23% to $6.7 billion in the third quarter of this year as investors adopted a cautious approach. On a year to date basis however, PE/VC investments in India are higher by 17.4% and the investment tally also looks set to surpass the previous year high driven by some large deals in the pipeline, provided there is no major macro setback. Traders will be looking for second-quarter corporate earnings for the financial year 2018-2019, with India’s biggest software services exporter Tata Consultancy services (TCS) reporting quarterly results today. IT companies are expected to report healthy numbers led by the ramp-up of recent large deal wins, improving the macro environment, and strong seasonality. Meanwhile, as per the draft National Policy on Electronics (NPE) released by the Ministry of Electronics and IT, the IT ministry looks to create a $400 billion electronics manufacturing industry by 2025 with mobile devices segment accounting for three-fourths of the production. There will be some buzz in aviation sector stocks with report that the central government slashed the excise duty on aviation turbine fuel (ATF) from 14% to 11%. This comes as a relief to the aviation industry that has been hit hard by high fuel prices. The duty change would come into force with effect from the October 11, 2018.

The US markets declined on Wednesday as investors worried that sharply rising interest rates would constrain the nation’s historic economic expansion. Asian markets were trading in red on Thursday after Wall Street suffered its worst drubbing in eight months, a conflagration of wealth that could threaten business confidence and investment across the globe.

Back home, the strong bounce back witnessed on the street on Wednesday, as both Sensex and Nifty rallied over 450 and 150 points, respectively to end the session in green terrain. The Reserve Bank of India’s (RBI) decision to inject Rs 12,000 crore liquidity into the system through purchase of government bonds on October 11 to meet festive season demand for funds boosted the domestic sentiments. The government will purchase bonds with maturity ranging between 2020 to 2030. Some optimism also came with a report stating that the US government’s development finance institution Overseas Private Investment Corporation (OPIC) is keen to invest in the development of India’s infrastructure, port and solar energy sectors. Separately, another private report stated that as a worsening current account deficit stokes fresh concerns, the government is considering strengthening priority-sector lending for exports to enable greater flow of credit to the sector. Gaining momentum continued in the second half of the session, aided by IMF Director of Fiscal Affairs Department’s statement that India’s debt is lower than the best or emerging market economies in the world. He cautioned that the global debt has reached a new record high of $182 trillion in 2017. The market participants overlooked a private report stating that India’s retail inflation likely sped up in September on higher food and fuel costs, pushed up by a battered rupee and suggesting further policy tightening from the RBI. Traders even paid no heed towards Moody’s Investors Service’s latest report indicating that the excise duty cut on petrol and diesel is credit negative for India as it will reduce government revenue and increase fiscal deficit by 0.1% to 3.4% of Gross Domestic Product (GDP) in the year ending March 2019. Finally, the BSE Sensex surged 461.42 points or 1.35% to 34,760.89, while the CNX Nifty was up by 159.05 points or 1.54% to 10,460.10.