Markets to make negative start of the holiday truncated week

Indian markets rallied on Friday, with Sensex settling near one-month high, tracking firm Asian markets over signs of easing trade tensions between the US and China, coupled with strong rupee amid fresh flow of foreign funds. Today, the markets are likely to make negative start of the holiday truncated week following weak global cues. Investors will be eyeing Services PMI data for the month of October to be out later in the day. Traders will be concerned about a private report stating that overseas investors pulled out a massive Rs 38,900 crore (over $5 billion) from the capital markets in October, the steepest outflow in nearly two years, on rising crude oil prices, depreciating rupee and worsening current account deficit. With this, the total outflow from the capital markets (equity and debt together) has reached over Rs 1 lakh crore so far this year. Also, there will be some cautiousness with an another private report saying with global crude prices remaining elevated, the rupee is likely to be under pressure, and may touch the 76 levels against the US currency over the next three months. However, some support may come with a report that consumer sentiment in India increased marginally in October as consumers remained upbeat about spending conditions despite turmoil in currency markets. Traders may take note of NITI Aayog’s chief executive officer Amitabh Kant’s statement that the country would be adding an additional $700 billion to its economy if its share of the women workforce increases to 48% from the present 24%. Meanwhile, about 75 lakh new tax filers have been added to the income tax payers list in the country this fiscal till now. The target for the taxman is to add 1.25 crore fresh tax filers by the end of the 2018-19 financial year that ends in March next year. There will be some buzz in banking sector stocks with report that the Finance Ministry is likely to finalise the second round of capital infusion for public sector banks (PSBs) towards the end of this month taking into account the latest quarter’s performance. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended lower on Friday amid contradictory accounts of expectations for a near-term resolution to a protracted US-China trade clash coupled with steep drop by Apple. Asian markets were trading in red on Monday, amid concern over whether trade tensions with China can be mended.

Back home, The Indian equities staged strong pullback to end the last trading day of the week with smart gains, aided by positive cues from global markets. After a fabulous start, the markets continued gaining momentum, buoyed by Finance Minister Arun Jaitley’s statement that India can crack into top 50 if it improves on time taken for registering real estate, starting business and enforcement of contracts. Buying got boost also because of a private report that India’s equity market capitalisation would grow at a compound annual rate of 12% to reach $6 trillion by 2028. Domestic sentiments were positive with the Finance Ministry’s statement that Goods and Services Tax (GST) collections in October 2018 crossed the Rs 1 lakh crore mark, after a gap of 5 months, on the back of festive demand, anti-evasion measures. Adding some comfort, Labour Minister Santosh Kumar Gangwar said that as many as 10 million employees were added afresh to avail the benefits of Employees' State Insurance Corporation (ESIC) schemes and more than 10 million people came under the fold of the EPFO. However, in the last leg of the trade, the key indices pared some of their gains to settle the session off day’s high points.  Trading sentiments got affected as leading stock exchange BSE will delist as many as nine companies from Monday as trading in their shares remained suspended for over 6 months. The market participants also got worried, as the US revoked duty-free concessions on import of at least 50 Indian products, mostly from handloom and agriculture sectors, reflecting the Trump administration's tough stand on trade-related issues with New Delhi. Traders took note of industry body, the Confederation of Indian Industry’s (CII) statement that the country needs to focus on areas like registering property and enforcing contracts to get even better ranking in the World Bank’s ease of doing business index in the coming years. Separately, Department of Industrial Policy & Promotion Secretary Ramesh Abhishek said that India hopes to rise up the World Bank’s Ease of Doing Business index further next year by improving its performance in categories such as paying taxes and insolvency recovery. Finally, the BSE Sensex surged 579.68 points or 1.68% to 35,011.65, while the CNX Nifty was up by 172.55 points or 1.66% to 10,553.00.