Markets likely to make negative start amid weak macro-economic data

Indian markets reversed almost all of their previous session’s losses and ended the day in green territory, with Sensex posting its biggest point-wise gain in over two years, driven by fall in crude prices and the recovery in rupee. Today, the markets are likely to make negative start amid lackluster trade in other Asian markets coupled with weak macro-economic data. The Central Statistics Office’s (CSO) data showed that India’s retail inflation rate slightly rose to 3.77% in September as compared to 3.69% in August, driven by higher food, fuel prices and a depreciating rupee. On the other hand the country’s industrial output eased in August with a slower rise of 4.3% as compared to 6.52% in July. Besides, traders will be eyeing another macro data of wholesale price inflation for September scheduled to be release later in the day. Traders will be reacting to the Securities and Exchange Board of India’s (SEBI) report that capital garnered by Indian companies through issuance of shares to institutional investors dived by 78% to Rs 7,000 crore during the April-August period of the financial year 2018-19 as compared to Rs 31,153 crore raised during the corresponding period of the previous financial year. Meanwhile, stressing on the need to strengthen institutions like IMF to tackle financial crisis, Economic Affairs Secretary S C Garg called for quota reforms so that share of emerging nations increases in line with their growing economic position. There will be some buzz in banking sector stocks with Reserve Bank of India’s (RBI) data showing that bank credit rose by 12.51% to Rs 89.82 lakh crore in the fortnight ended September 28, while the deposits grew by 8.07% to Rs 117.99 lakh crore. also, there will be some reaction in telecom sector stocks with Telecom industry body, the Cellular Operators’ Association of India’s (COAI) statement that the import duty hike on certain communication products will increase industry’s import costs by about 10% adding to financial woes, but asserted that operators are fully aligned to the interest of the nation. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended significantly higher on Friday on the back of bargain hunting, while the major averages regained some ground following a two-day sell-off. Asian markets were trading mostly in red on Monday as worries over Sino-US trade disputes, a possible slowdown in the Chinese economy and higher US borrowing costs tempered optimism despite a rebound in global equities late last week.

Back home, the last trading day of the week turned out to be fantastic for the Indian equity benchmarks, as they bounced back from the losses posted a day before, supported by rally seen in global markets. The markets made a gap-up opening and never looked back throughout the day, gaining strength to strength as investors continued hunt for fundamentally strong stocks. Domestic sentiments got boost with Federation of Indian Chambers of Commerce and Industry’s (FICCI) latest quarterly survey report that the outlook for India’s manufacturing sector is positive for July-September quarter (Q2) with higher production in manufacturing, even as the hiring outlook for the sector remains subdued. Besides, the survey report showed that exports to rise in the second quarter. Adding some comfort, Finance Minister Arun Jaitley said that the number of people filing tax returns in India is likely to double to 7.6 crore during 5 years of present government due to initiatives like rationalisation of tax structure, lowering of rates and anti-black money measures. The street remained cheerful, with Commerce Minister Suresh Prabhu’s statement that the new Industrial Policy is in sync with the challenges and opportunities for India with the fourth industrial revolution technologies and will place the country firmly in the global supply and value chains. Some support also came with a report that the rupee will appreciate from the current level due to sliding crude prices on the back of the downward revision of global growth forecast by the International Monetary Fund (IMF). The market participants reacted positively to the Revenue Department of the Finance Ministry’s statement that the government yet again increased import duty on several electronic items and telecom equipment to rein in current account deficit (CAD) and stabilise the rupee. Investors overlooked research agency, India Ratings’ report stating that frequent bid cancellations, the falling Indian rupee and lack of clarity on safeguard duty implications are making bidders cautious about competitive tariffs in renewable energy projects. Finally, the BSE Sensex surged 732.43 points or 2.15% to 34,733.58, while the CNX Nifty was up by 237.85 points or 2.32% to 10,472.50.