Markets likely to make positive start

Indian markets witnessed a volatile trading session with extreme swings between positive and negative zones and settled in red territory on Tuesday amid lingering US-China trade war concerns and heavy selling by foreign portfolio investors. Today, the markets are likely to make positive start following strong global cues. Traders will be getting some encouragement with a private report stating that India’s long-term growth story remains robust despite global headwinds as well as rupee depreciation and high oil prices. It aaded that strain on India’s external balance sheet has increased due to slide in forex reserve, outflows in foreign investment, increased current account deficit (CAD), rupee depreciation and high global crude oil prices. Traders may take note of report that Commerce and Industry Minister Suresh Prabhu hinted at improvement in India’s ranking in the World Bank’s ease of doing business report, to be released on Wednesday. India jumped 30 places to rank 100th among 190 nations in the last year’s World Bank’s ease of doing business index. However, there may be some cautiousness with Reserve Bank of India’s report showing that India Inc’s foreign borrowing more than halved to $1.71 billion in September. Meanwhile, the high level the Financial Stability and Development Council (FSDC) meeting chaired by Finance Minister Arun Jaitley discussed liquidity issues being faced by the non-banking financial companies. There will be some buzz in power sector stocks with report that the government is looking to execute at least two mergers among central public sector enterprises (CPSEs) in the power sector to step up the disinvestment process and meet its target. Also, there will be some reaction in rubber industry related stocks with report that the projected growth in the rubber consumption which is a corollary to overall economic development of the country necessitates the need to expand rubber production though the current prolonged phase of natural rubber price crash has impacted the growers deeply. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended significantly higher on Tuesday, helped by strong gains for chipand transport stocks as investors took advantage of cheaper prices following a steep recent pullback for equities. Asian markets were trading mostly in green on Wednesday, thanks to a rebound on Wall Street.

Back home, Indian equity benchmarks wrapped up a volatile session on pessimistic note on Tuesday, with losses of over half a percent. The markets made a cautious opening of the day to trade choppy, impacted by the Reserve Bank of India’s (RBI) latest data report stating that investment of Indian companies in their overseas ventures declined by 47.08% to $1.54 billion in September 2018, as compared to $2.91 billion invested in their joint ventures (JVs) and wholly-owned subsidiaries (WoS) abroad during September 2017. Domestic sentiments remained under pressure, as with private report indicated that high oil prices are hurting consumers and could also have adverse implications for producers. Major emerging Asian economies such as India and Indonesia have been hit hard this year by rising crude oil prices. Adding more worries among market participants, Crisil’s latest report stated that depreciating rupee puts nearly half of the solar power capacities under implementation worth around Rs 28,000 crore at viability risk. The report also noted that import of solar modules has got costlier due to rupee fall and increased the cost of setting up solar plants. In the last hours of the trade, the markets weaken further, as Finance Minister Arun Jaitley criticised the Reserve Bank of India for failing to check indiscriminate lending during 2008 and 2014 that has led to the present bad loan or NPA crisis in the banking industry. The traders overlooked Economic Affairs Secretary Subhash Chandra Garg’s statement that the government is trying to find ways to ensure stability of FPI fund flows into the financial markets. He also said developments like bond yield cycle, taxation reforms, in the US have not hurt Foreign Direct Investment (FDI) flow into the country. The street also failed to take any sense of relief with Commerce and Industry Minister Suresh Prabhu’s statement that the government will work on promoting the growth of the education sector to help increase the share of overall service sector in the country's economy. Meanwhile, India and Japan signed a pact to raise the scope of a bilateral currency swap arrangement to a record $75 billion, aimed at bringing in greater stability in the foreign exchange and capital markets, amid a slide in the rupee in recent months. Finally, the BSE Sensex lost 176.27 points or 0.52% to 33,891.13, while the CNX Nifty was down by 52.45 points or 0.51% to 10,198.40.