Markets likely to make slightly negative start amid weak global cues

Indian markets snapped six-day gaining streak and ended lower on Tuesday, amid sharp fall in Infosys, while weak earnings from a raft of companies further dented investors’ sentiment. Today, the markets are likely to make flat-to-negative start tracking weak global cues. There will be some cautiousness with report that corporate India's merger and acquisition activity in the July-September quarter witnessed a downtrend with total deal value falling by more than half over the last year, largely owing to a slump in economic activity and lack of big ticket deals. Investors will also be concerned with report that India Ratings & Research (Ind-Ra) has attributed widening of fiscal deficit in states in 2018-19 to slippage on the non-capital expenditure by them. The rating agency believed that meeting the N K Singh panel’s recommended level of aggregate debt burden at 20 per cent of GDP by 2022-23 by states will be a challenge in an economic environment characterised by slow growth and weak demand. Traders may take note of a private report that as a run-up to the first supplementary demand for grants, the govt is likely to be saddled with large demands for additional expenditure from a number of departments. Though, some support may come later in the day with report that GDP growth numbers in China and India were not terrible, suggesting the slowdown should not cause excessive pessimism. Meanwhile, markets regulator SEBI came out with a framework for listing of commercial papers on stock exchanges in order to broaden investor participation in such securities. To enable listing of commercial papers (CPs) and to ensure investor protection, Sebi noted that it is important that issuers, who intend to list such securities, make appropriate disclosures at the time of listing and on a continuous basis. Banking stocks will be in focus with global rating agency Fitch’s report that banks would face a capital shortfall of about $50 billion (about Rs 3.5 lakh crore) in the event of a systemic crisis in the non-banking financial company (NBFC) sector. The study estimated that the banking system's gross NPA ratio would rise to 11.6 percent by 2020-21 from 9.3 percent at 2018-19. There will be some reaction in steel stocks with Icra’s report that domestic hot-rolled coil (HRC) prices, which remained much higher than the anti-dumping duty (ADD) levels throughout FY2018 and FY2019, have corrected steeply, dropping below the ADD stipulated level for the first time in the second week of October 2019. There will be lots of earnings reaction based on the performance of the companies, to keep the markets buzzing.

The US markets ended lower on Tuesday after British lawmakers rejected the government's proposed timetable for passing legislation to ratify its deal to exit the European Union. Asian markets are trading in red on Wednesday following overnight losses on Wall Street.

Back home, Indian equity bourses broke 6-day winning rally on Tuesday’s trading session, with Sensex and Nifty closing lower by 334 and 73 points, respectively. The day started on a cautious note, as Finance Minister Nirmala Sitharaman cautioned that trade wars and protectionism have generated uncertainties, which will ultimately impact the flow of capital, goods and services. Anxiety also came among investors, amid a report showing that as many as 360 infrastructure projects, each worth Rs 150 crore or more, have shown cost overruns to the tune of over Rs 3.88 lakh crore owing to delays and other reasons. Key equity benchmarks remained lackluster during the whole trading session, despite the International Monetary Fund’s (IMF) statement that India's decision to reduce corporate income tax to help revive investment. Though, the agency said India should address continued fiscal consolidation and secure long-term stability of the fiscal conditions. Market participants paid no heed towards the Retirement fund body, Employment Provident Fund Organisation’s (EPFO) latest Provisional Estimate of Net Payroll data report showing that India created 10,86,113 new jobs in the month of August 2019. Finally, the BSE Sensex lost 334.54 points or 0.85% to 38,963.84, while the CNX Nifty was down by 73.50 points or 0.63% to 11,588.35.