Markets likely to make positive start amid fall in crude oil prices

Indian markets ended with modest gains on Monday, extending their winning streak to second consecutive session with firm global cues. Today, the markets are likely to make optimistic start tracking firm cues from Asian peers amid fall in crude oil prices. Investors will be eyeing balance of trade data to be released later in the day. Traders will be getting some encouragement with Minister of State for Finance Anurag Thakur’s statement that Indian economy is structurally and fundamentally very strong and the current slowdown, which is cyclical in nature, would not affect it much. He also exuded confidence that India would achieve the target of becoming $5 trillion economy by 2024-25. Though, some cautiousness may come as the data released by the Central Statistics Office (CSO) showed that India's retail inflation rate grew 3.99% in September which is very close to the Reserve Bank of India's (RBI) target level of 4%. The retail inflation for August was 3.21%. Also, former RBI Governor Raghuram Rajan has expressed concern over India's fiscal deficit figures, stating that it is the likely reason behind the slowdown in Indian economy. He also criticised the government over its populist decision-making which failed to focus on economic growth. Meanwhile, Corporate Affairs Secretary Injeti Srinivas said the government is examining suggestions to raise the threshold of Rs 1 lakh default to invoke the Insolvency and Bankruptcy Code (IBC) to reduce the number of cases in the NCLT. Banking stocks will be in focus as RBI governor Shaktikanta Das will meet the heads of the state-run banks on October 15. The meeting is likely to discuss NPA resolution, potential stressed assets, restructuring of MSME loans and stress in the realty sector are among the issues which are likely to feature at the meeting. There will be some buzz in the oil and gas stocks as Oil Minister Dharmendra Pradhan made a vehement appeal to Finance Minister Nirmala Sitharaman for bringing jet fuel and natural gas under the ambit of GST to reduce multiplicity of taxes and improve business climate. There will be some reaction in telecom stocks as Telecom Minister Ravi Shankar Prasad assured the industry of reforms in spectrum pricing, and said auctions will take place in the current financial year. Also, healthcare stocks will be in focus with Icra’s report that the healthcare sector is on a recovery path after two previous years of muted performance marred by several regulatory measures. There will be some result announcements to keep the markets in action.

The US markets ended marginally in red on Monday as investors concluded the trade deal with China will not lead to significantly lower trade barriers or foster global economic growth in the near term. Asian markets are trading mostly higher on Tuesday as some investors held out hope that Britain still had a chance to avoid a messy exit from the European Union at key negotiations this week.

Back home, Indian equity bourses closed Monday’s trading in green terrain, with Sensex & Nifty reclaiming their crucial levels of 38,200 & 11,300, respectively. After a positive start, indices slipped into red, as the World Bank slashed its economic growth forecast for India to 6% for the current fiscal (FY20) from its April projection of 7.5%. It also warned that the severe slowdown could further weaken the country’s stuttering financial sector. But soon, recovery staged over markets, as India’s Wholesale price index (WPI) inflation fell sharply at 0.33% in the month of September 2019 as against 1.08% (provisional) for the previous month and 5.22% during the corresponding month of the previous year. In second half of the trading session, key markets traded near their intraday high points, amid Reserve Bank of India’s (RBI) report which showed that India’s foreign exchange reserves increased by $4.239 billion to hit a record high of $437.833 billion as on October 4. However, most of the gains got trimmed in the last leg of the trade, amid reports India's factory output growth, measured by the Index of Industrial Production (IIP), contracted by 1.1% in August, recording the poorest performance in seven years due to a sharp decline in production of capital goods and consumer durable. The IIP had shown a growth of 4.8% in August 2018. Finally, the BSE Sensex gained 87.39 points or 0.23% to 38,214.47, while the CNX Nifty was up by 36.10 points or 0.32% to 11,341.15.