Markets to make weak start on sluggish global cues

Domestic markets ended with losses of around one percent in a highly volatile session on Monday. The losses came in amid weakness in other Asian markets and rise in global oil prices. Today, the start of the session is likely to be on negative side tailing the weakness in other global markets. There will be some cautiousness too, with report that industrial output grew at the slowest pace in four months at 4.5% in September 2018, as the festival season started late this year compared to 2017. Growth faltered as the output of capital goods and mining expanded at a slower pace in September than in the previous month. However, markets will be getting encouragement latter part of trade in the day with the consumer price index (CPI) inflation easing to 3.31 percent in the month of October 2018 as compared to 3.58 percent in October 2017 on low food prices. The retail inflation number is the lowest since September 2017 when it touched 3.28 percent. Also, the prices of vegetables fell by 8.06 percent in the month of October in comparison to a 4.15 percent contraction in September. Meanwhile, the revenue department has decided to extend the facility of uploading digitally signed documents for all types of exports under Indian Customs EDI System (ICES) with a view to improve ease of doing business and promote paperless processing. The Aviation sector stocks will be in action as India’s domestic air passenger traffic grew in double digits for the 49th consecutive month in September. India’s domestic revenue passenger kilometres (RPK) in the month under review rose by 19.8 percent compared to the corresponding month of the previous year. There will be some buzz in the agriculture stocks with report that India has emerged as a major seed hub in Asia as 18 companies out of 24 leading firms evaluated, have invested in breeding and production activities in the country. Besides, there will be lots of important earnings announcements to keep the markets buzzing.

The US markets ended lower on Monday amid concerns about the outlook for global economic growth and including oil-price swings. President Donald Trump claimed that the prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches. Asian markets were trading lower on Tuesday. Japanese stocks are down more than 3% as a sell-off in US technology shares overnight and growing concerns over cooling global economic growth spilled over into Asia.

Back home, the Indian benchmarks witnessed steep fall on Monday, with losses of around a percent, ahead of the release of key macroeconomic data. The key indices made a firm start of the week, supported by Reserve Bank of India (RBI) data report that bank credit rose by a healthy 14.41% during the fortnight to October 26, despite the overall increase in lending rates, for first time in over five years. The street was in positive mood, as over Rs 11,900 crore has been released to the states by the Centre from Goods and Services Tax (GST) compensation fund during August-September, after regular and ad-hoc settlement of Integrated GST (IGST) fund. Some support also came with a private report indicating that foreign investors have pumped in nearly Rs 4,800 crore into the Indian capital markets in the last five trading sessions, after pulling out hefty funds in October, amid cooling global crude oil prices and rising rupee. Meanwhile, terming GST as a monumental reform, Finance Minister Arun Jaitley said that the new tax reform had only a transient impact on growth and that too for two quarters. However, markets soon turned volatile and traded in red for the most part of the session, impacted by Federation of Indian Export Organisation (FIEO) President Ganesh Gupta’s statement that exports of over half of the 30 sectors closely monitored by the Commerce Ministry were in the negative zone in September. Overall exports in September were contracted by 2.15% to $27.95 billion mainly due to the base impact. Some concerns also came among the local traders with former RBI governor Raghuram Rajan’s statement that demonetisation and the GST are the two major headwinds that held back India’s economic growth last year, asserting that the current 7% growth rate is not enough to meet the country’s needs. Adding some anxiety, the RBI cancelled the certificate of registrations of as many as 31 non-banking finance companies (NBFCs) on November 09 for unspecified reasons. Domestic sentiments also got hit with a private report stating that corporate earnings have failed to keep pace with the trajectory of nominal gross domestic product (GDP) over the past 10 years. The combined net profit of listed companies has grown at a compound annual growth rate (CAGR) of 4.1%, against 12.9% growth in India’s GDP at nominal prices during the period. Finally, the BSE Sensex lost 345.56 points or 0.98% to 34,812.99, while the CNX Nifty was down by 103.00 points or 0.97% to 10,482.20.