Markets to make positive start amid falling crude oil prices

Indian equity markets ended with gains of around one per cent on Tuesday on fresh fall in oil prices and heavy buying in oil & gas, capital goods, infrastructure and bank stocks amid firm global cues. Today, the start is likely to be mildly positive amid falling crude oil prices. Traders will be getting some encouragement as the Securities and Exchange Board of India (SEBI) tightened disclosure and review norms for credit rating agencies (CRAs). SEBI ordered CRAs to analyse deterioration in the liquidity conditions of an issuer, while monitoring its repayment schedules and taking into account any asset-liability mismatches. These measures will enable investors to understand underlying rating drivers better and make more informed investment decisions. Meanwhile, the Reserve Bank of India (RBI) has announced it will inject Rs 12,000 crore into the system through purchase of government securities on November 15. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of the following government securities under Open Market Operations. Besides, traders will be eyeing a macro data of wholesale price inflation for October scheduled to be release later in the day. The banking sector stocks will be in action on report that the government is of the view that the RBI should resort to Basel III norms for capital adequacy in banks rather than the present stricter guidelines which restrict the lending capacity of lenders. Agriculture sector stocks too may see some action as Agri input companies posted decent growth in revenue and net profit for the quarter ended September 2018, due to an increase in sales volume on normal monsoon rainfall and price hikes. There will be some buzz in the solar sector stocks on private report which said that India’s solar capacity addition in the current financial year is expected to be 55% short of the previous year, at 4.1 GW as the industry continues to face policy and execution challenges. Also, there will be some buzz in the oil and gas stocks on report that India's fuel demand rose 4.0% in October compared with the same month last year. Besides, there will be lots of important earnings announcements to keep the markets buzzing.

The US markets ended mostly lower after a volatile session on Tuesday as traders continued to express uncertainty about the global economic outlook and the impact of an anticipated increase in interest rates. Asian markets were trading mixed after volatile session on Wall Street.

Back home, Indian equity benchmarks made a smart recovery on Tuesday to end the trading session near their intraday high points. The markets open on a cautious note, as India’s industrial production measured by Index of Industrial Production (IIP) grew at the slowest pace in four months at 4.5% in September 2018, with poor performance of mining sector and lower offtake of capital goods. Anxiety also came on the street with Moody's Investors Service report stating that global credit conditions will weaken in 2019 as economic growth decelerates, funding costs increase, liquidity tightens and market volatility returns. Some concerns came with the report that several ministries have flagged major concerns over ongoing negotiations for the Regional Comprehensive Economic Partnership (RECP) agreement, with cheap imports from China being the biggest fear, apart from expectations that there will only be limited gains for the country. Domestic sentiments were weak during morning deals with SBI's report that the sharp decline in the headline inflation print to 3.31% for October a year-year-low will result in a prolonged pause in the rates, but raises a big question mark on the Reserve Bank’s inflation forecasting. However, the indices managed to erase all of their losses in afternoon deals, supported by firm opening of European markets coupled with easing inflation. India’s retail inflation based on Consumer Price Index (CPI) softened to a one-year low of 3.31% in the month of October 2018, the back of cheaper kitchen staples, fruits and protein-rich items. Traders took encouragement with a report stating that India is pushing for liberalising norms to promote services trade with 15 other countries including China as part of a mega free trade agreement as it looks for a balanced pact with these nations.  Finally, the BSE Sensex gained 331.50 points or 0.95% to 35,144.49, while the CNX Nifty was up by 100.30 points or 0.96% to 10,582.50.