Markets likely to make optimistic start of the new month

Indian markets erased all of their early losses to settle near intra-day high level on Wednesday on easing of concerns over the ongoing rift between the Reserve Bank of India (RBI) and the government boosting investors sentiment. Today, the start of new month is likely to be in green with positive cues from global markets. Investors will be eyeing manufacturing PMI data to be out later in the day. Traders will be getting encouragement with report that India jumped 23 spots in the World Bank’s ease of doing business ranking to 77th place, becoming the top ranked country in South Asia for the first time and third among the BRICS. As per the report, the biggest gain was in construction permit where India climbed 129 ranks to 52nd place on the back of targeted government effort to remove hurdles. Some support may also come with Industry chamber FICCI’s statement that more measures are needed to make adequate liquidity available in the system and strengthen the financial sector for attaining 8% plus gross domestic product (GDP) growth. Traders may take note of a report that the Department of Industrial Policy and Promotion (DIPP) is working with the tax department and regulators to ease the rules and laws for startups to support budding entrepreneurs. However, there may be some cautiousness with the commerce and industry ministry’s data showing that growth of eight infrastructure sectors slowed down to 4.3% in September, the lowest in the last four months, as production of crude oil and natural gas declined. There will be some buzz in pharma sector stocks with India Ratings’ (Ind-Ra) report that the domestic pharmaceutical sector is likely to post higher margins in September quarter (Q2FY19) on a year-on-year basis, largely supported by the depreciation of rupee against the US dollar. Also, there will be some reaction in infra sector related stocks with Niti Aayog CEO Amitabh Kant’s statement that India will need around $4.5 trillion till 2040 for development of infrastructure sector in the country. He further said that there is an urgent need to restructure entire existing public private partnership (PPP) framework as there are delays in completion of infrastructure projects due to disputes. The auto sector stocks will also be in action, reacting to their monthly sales numbers. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended sharply higher for second straight session on Wednesday with report from payroll processor ADP showing stronger than expected private sector job growth in October coupled with upbeat corporate earnings. Asian markets were trading mostly in green in early deals on Thursday, as bruised investor sentiment got some relief from another robust Wall Street session.

Back home, Indian equity indices made strong gains on Wednesday, with Sensex and Nifty ending the trading session near their intraday high points, tracking positive cues from global markets. After a cautious start, the markets traded under pressure during early deals, amid the Reserve Bank of India’s (RBI) report showing that India Inc’s foreign borrowing more than halved to $1.71 billion in September. The borrowings were $3.48 billion in September last year. Traders’ sentiments got impacted by a report stating that Indian stocks are over-valued and that earnings growth could slow in the wake of macro headwinds, foreign funds have been taking risk off the table. The chances of capital losses in the bond markets, as yields rise, has seen money move out of the debt market too. Some concerns also came with a private report stating that India, which presently has a rich demographic dividend, will need 9.94 crore additional jobs over the decade. It highlighted warning that lack of concrete efforts could push India into jobless growth. Moreover, 80% of the new jobs demand will come from Tier 2 and Tier 3 districts of just 10 states. However, the key indices gained the ground in afternoon deals to rally in northward direction, as 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. Adding more optimism, DIPP Secretary Ramesh Abhishek said that the Department of Industrial Policy and Promotion (DIPP) is working with the tax department and regulators to ease the rules and laws for startups to support budding entrepreneurs. The markets participants also got relief with SBI study report showed that inflation is likely to remain below 4% in the coming months, notwithstanding possible increase in onion prices. Sentiments were positive 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. 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. Finally, the BSE Sensex surged 550.92 points or 1.63% to 34,442.05, while the CNX Nifty was up by 188.20 points or 1.85% to 10,386.60.