Markets likely to open marginally in red amid rise in crude oil prices

Indian markets extended their northward journey for fifth straight session and ended higher on Thursday on account of strong global cues. Today, the start of session is likely to be marginally in red amid rise in crude oil prices. Investors will be looking ahead to the market heavy weight Reliance Industries’ Q2 numbers to be released later in the day, the company is likely to report decent profit growth in September quarter earnings. There will be some cautiousness with the International Monetary Fund’s (IMF) statement that though India has worked on the fundamentals of its economy, there are problems, including the long-term drivers of growth that need to be addressed. It said in India, what is critically important is to continue with addressing the long-term drivers of growth. Investment in human capital in India is a top priority. It has to continue bringing women in the labour force. It is very important. Also, traders will be concerned with report that India is likely to miss its fiscal deficit target of 3.3% of gross domestic product for the current financial year by 30-50 basis points, due to the sharp slowdown in the economy that has severely crimped tax collection goals. However, investors may take some support later in the day, amid positive global cues. Some support may also come with Union Finance Minister Nirmala Sitharaman’s statement that investors can find no better place in the world than India that has a democracy loving and capitalist respecting environment. She added that the government was continuously working to bring reforms. Market participant may take note on report that PM Narendra Modi asserted that his government was on course to make India a five-trillion-dollar economy in the next five years despite apprehensions being expressed by experts and the opposition. Aviation stocks will be in focus with the Directorate General of Civil Aviation (DGCA) data showing that domestic air passenger traffic declined for the fourth consecutive month in September, amid a slowing economy and lean travel season. There will be some reaction in FMCG stocks with a private report that the fast-moving consumer goods (FMCG) manufacturers would witness even softer growth in the October-December 2019 period. As per the report, growth in Q4CY19 could be in the range of 6.5-7.5%. There will be some buzz in the jewellery stocks with Gems and Jewellery Export Promotion Council’s (GJEPC) statement that the overall gems and jewellery exports is expected to decline of 5-10% in this financial year on the back of US-China trade war, protests in Hong Kong and the implementation of VAT in the Middle East. There will be lots of earnings announcements too, to keep the markets in action.

The US markets ended higher on Thursday, after a draft Brexit deal was struck between UK and EU officials, and on the back of solid earnings from more blue-chip companies. Asian markets are trading mostly in green on Friday, tracking gains on Wall Street, but upside remained limited amid concern that the Chinese economy is likely to show weaker growth.

Back home, last hour rally helped Indian equity markets to end Thursday’s session near their intraday high points, with Sensex & Nifty reclaiming their crucial psychological levels of 39,000 and 11,550, respectively. After a cautious start, indices remained flat for the first half of the session, impacted by a report that the Securities and Exchange Board of India is planning to further tighten rules for participatory notes (P-notes), offshore derivative instruments issued by brokers to foreign investors not registered in the country. Sentiments also got hit, after latest data of Reserve Bank of India showed that credit growth at Indian banks has dropped to its lowest level in nearly two years, as slowing domestic consumption weighs on demand. However, key benchmarks gained traction in the second half of the trading session, tracking firm European markets. Market participants took support with Union Finance Minister Nirmala Sitharaman’s statement that Prime Minister Narendra Modi’s vision of making India a $5-trillion economy and a global economic powerhouse by 2024-25 is ‘challenging’ but ‘realisable’ and underlined that more reforms are on the anvil before the end of the fiscal year. Traders also got comfort with a private report stating that the digital payment system that has been developed in India not only allows big tech companies to participate in it but also has convenience, ease of use, low cost and financial inclusion. Finally, the BSE Sensex gained 453.07 points or 1.17% to 39,052.06, while the CNX Nifty was up by 122.35 points or 1.07% to 11,586.35.