Markets to make negative start on Tuesday

Indian markets wiped out all of their early gains to settle in red territory for third straight session on Monday, due to late sell-off in oil & gas, consumer durables, PSU, IT and infrastructure stocks amid crude again rising past $80 a barrel. Today, the markets are likely to make negative start tacking weak trade in other Asian counterparts amid global growth concerns. There will be some cautiousness with a private report stating that India is the second-most underinsured country in the world with an insurance gap of $27 billion (approximately Rs 1.98 lakh crore). traders will react negatively to another private report that the crude oil import bill for India is expected to increase by $37 billion to $125 billion during the current financial year (2018-19, or FY19) - a 42% spike over the 2017-18 (FY18) bill of $88 billion. However, some support may come later in the day with the Central Board of Direct Taxes (CBDT) data showing that the net direct tax collection in the country grew by 15.7% on year-on-year basis to reach Rs 4.89 lakh crore in the current fiscal till third week of October. This marks over 42% of the full-year direct tax collection target of Rs 11.5 lakh crore for the fiscal ending March 31, 2019. Traders may take note of report that the Central government expressed hope exports would touch an all-time high in 2018-19. There will be some buzz in the banking sector stocks with Moody’s Investors Service’s statement that the profitability of Indian banks is distinctively weak compared to those in BRICS nations, but it will improve from next fiscal as asset quality stabilises. On capitalisation, Moody’s said it is the weakest for Indian banks with a tangible common equity ratio of 8.7% at the end of 2017. There will be some reaction in sugar sector stocks with report that a second bailout package for sugar industry could be in the offing as the food ministry plans to float a Cabinet note seeking loan incentives for ethanol producers. This will be in addition to the sugar package announced in June. There will be lots of earnings reaction based on the performance of the companies, to keep the markets buzzing.

The US markets closed mostly lower on Monday, as investors braced for a deluge of earnings against the backdrop of higher interest rates and concerns about global growth. Asian markets were trading in red on Tuesday, following weak trade on Wall Street, as investors remain cautious over mounting geopolitical tensions around the world.

Back home, last hour selling dragged the markets down on Monday, with Sensex and Nifty giving up their crucial psychological levels of 34,200 and 10,250, respectively. The key indices made a positive start of the week, aided by a private report stating that India is likely to emerge as the third-largest economy in the world in just over a decade from now, surpassing Japan and Germany.  Traders got relief after the Finance Ministry extended the deadline for filing the GSTR-3B summary return of sales for September by five days to October 25. With this extension, businesses, which wish to claim input tax credit (ITC) benefit for July 2017-March 2018 period, can do so till October 25. Adding some optimism, ASSOCHAM said that the Reserve Bank of India’s decision to incentivise banks will help NBFCs in tackling liquidity crunch. The RBI allowed the banks to use government securities equivalent to their incremental credit to NBFCs for a three-month period to meet their liquidity coverage ratio requirements. However, in the last hour of the trade, the markets erased all of their gains to end the session lower, despite firm cues from global markets. The market participants got cautious as traders' body CAIT warned that allowing central as well as state tax administrations to initiate action against any taxpayer irrespective of jurisdiction would lead to harassment of traders and complicate the tax system. Anxiety spread on the street after job creation slowed down by 8.39 percent to stand at 8,94,769 in August month as against the revised figure of 9,76,675 in July month. The trade also got hit with the Reserve Bank of India’s (RBI) report showing that India’s forex reserves declined by $5.14 billion during the week ended October 12, when the rupee slipped to 74 and beyond against the US dollar. Meanwhile, the Central Board of Direct Taxes (CBDT) said that the number of taxpayers earning above Rs 1 crore per annum has risen to over 1.40 lakh in the country in the last four years, depicting a growth of about 60 percent. Finally, the BSE Sensex plunged 181.25 points or 0.53% to 34,134.38, while the CNX Nifty was down by 58.30 points or 0.57% to 10,245.25.