Markets likely to make gap-up opening on Wednesday

Extending gains for third consecutive session, Indian markets ended Tuesday’s trade on positive note with Sensex and Nifty settling above 35,100 and 10,550 levels, respectively, on upbeat cues from the global markets coupled with a recovery in the rupee and easing crude oil prices. Today, the markets are likely to make gap-up opening following firm trade in global markets. Traders will be getting some encouragement with report that India has been ranked as the 58th most competitive economy on the World Economic Forum’s global competitiveness index for 2018, which was topped by the US. The WEF said India’s rank rose by five places from 2017, the largest gain among G20 economies. There will be some support with the Reserve Bank of India’s (RBI) forecast that the share of investments in gross domestic product (GDP) will rise to 33% by FY23 from 31.4% recorded in the last fiscal. Meanwhile, NITI Aayog CEO Amitabh Kant said that Gender parity and exports are two critical areas which India must focus on to be able to grow at higher rates of 9-10% per year for the next three decades or more to lift a very young population above poverty line. However, there may be some cautiousness with Commerce and Industry Minister Suresh Prabhu’s statement that no country can benefit from the decline in the world trade, and the slowing global economy is a concern for all nations including India. Traders may react to a report that investments in the Indian capital market through participatory notes (P-notes) hit a nearly nine-and-a-half year low of Rs 79,548 crore till September after registering a rise in such fund infusion in the preceding month. There will be lots of earnings reaction based on the performance of the companies to keep markets buzzing.

Recovering from previous session’s losses, the US markets settled higher on Tuesday as a batch of strong earnings reports pushed aside lingering tensions over trade and geopolitics that have pressured markets. Asian markets were trading in green on Wednesday after upbeat US earnings reports drove a rebound on Wall Street and helped restore a little confidence in emerging market stocks and currencies.

Back home, key Indian benchmarks extended northward journey for the third straight session and ended the Tuesday’s trading session in green territory, amid positive earnings optimism among traders. The markets made a firm start to remain bullish throughout the session, aided by the United Nations Conference on Trade and Development’s (UNCTAD) latest report indicating that in South Asia, India attracted $22 billion of foreign direct investment (FDI) flows, contributing to the subregion’s 13% rise in FDI in the first half of 2018 (H1 2018). Adding some optimism, India’s trade deficit declined to a five-month low in September even as exports contracted, providing some respite from the rising gap that has sparked concern about the current account deficit (CAD). Trade deficit declined to $13.98 billion in September from $17.39 billion in August following slower growth in imports. Besides, exports were pegged at $27.95 billion in September, down 2.15% from a year ago, while imports rose 10.45% to $41.9 billion, lowest in five months. Optimism continued on the street, with a private report stating that strong earnings, promising demographics and big ticket deals drove the M&A activity, clocking deals worth $76 billion in January-September from over 350 transactions. Some support also came with reports that India and the UAE deliberated on opportunities for cooperation and investment in both the countries, in order to drive investments in areas including highways, airports and infrastructure. The street took note of Finance Minister Arun Jaitley’s statement that India needs a strong and decisive leadership at the Centre to continue its high growth path and take swift decisions. Investors also took some support with a report that Foreign Institutional Investors (FIIs) bought shares worth Rs 67.86 crore on October 15, 2018, as per provisional data from the stock exchanges. Finally, the BSE Sensex surged 297.38 points or 0.85% to 35,162.48, while the CNX Nifty was up by 72.25 points or 0.69% to 10,584.75.