Markets likely to make positive start on Tuesday

Indian markets ended marginally higher on Friday after a choppy session amid mixed domestic cues. On Sunday, equities markets started Samvat 2076 on a strong footing, as earnings of some of the biggest companies’ bolstered optimism about the recovery in the nation’s economy. Markets remain closed on Monday on account of Diwali. Today, the markets are likely to make positive start following firm global cues coupled with fall in crude oil prices. Traders will be taking some encouragement with the Reserve Bank’s statement that continuing its northward surge, India’s forex kitty has swelled by $1.039 billion to a new life-time high of $440.751 billion for the week ended October 18. Some support may come with World Bank group President David Malpass’ statement that India must undertake financial reforms in three key areas like sound regulations for non-banking financial companies (NBFCs), allow private sector banks in a big way in the banking sector and deepen capital market to aide growth. Besides, Union Steel Minister Dharmendra Pradhan said that India will spend about $1.4 trillion on its infrastructure development in the next five years. However, there may be some cautiousness with the payroll data of Employees' State Insurance Corporation (ESIC) showing that around 1.3 million jobs were created in August, lower than 1.44 million in the previous month (July). Meanwhile, leading stock exchanges BSE and the NSE have decided to take additional surveillance measures in order to reduce volatility in stocks having high promoters pledge. The exchanges have decided to levy a minimum margin of 35% on the stock (including stocks in derivatives segment) where promoters pledged their holding by more than 25% of the total equity capital and have a market capitalization of over Rs 1,000 crore. There will be some reaction in auto stocks with Ind-Ra report that automobile retail sales are likely to pick up with an improvement in consumer sentiment during the ongoing festive season due to recent liquidity easing measures announced by the government and on back of favourable monsoons. Reality stocks will be in focus with report that private equity investments in the domestic real estate sector rose by 19% to $3.8 billion during January-September 2019, mostly in commercial properties. There will be some reaction in the jewellery stocks with the Gems and Jewellery Export Promotion Council (GJEPC) report that India's gross exports of gems and jewellery sector are expected to decline 5-7% in 2019-20 as compared to the previous fiscal, on account of a global downturn and rise in gold prices which have affected domestic demand.

The US markets climbed on Monday as rising optimism for a trade deal with China combined with solid earnings and bets the Federal Reserve will cut rates. Asian markets are trading mostly higher on Tuesday, amid hopes for an easing in US-China trade tensions.

Back home, Indian equity markets ended Samvat 2075 on muted note on Friday, with Sensex & Nifty closing with marginal gains. After a cautious start, key indices remained positive for a brief period, aided by Finance Minister Nirmala Sitharaman’s statement that efforts will be made to further simplify Goods and Services Tax, and expressed hope that it will help in further improving India’s ranking in the World Bank’s ease of doing business index. Soon markets turned volatile, amid a report that the government might be impelled to steeply cut its direct tax collection target, with growth in this regard slumping to 3.5 per cent up to mid-October from the same period in the earlier financial year, as against the Budget target of 17.3 per cent. Indices altered between green & red terrain, after Director of Development Economics at the World Bank, Simeon Djankov said India needs a fresh set of bold reforms in the next three to four years if it wants to be among the top 50 countries with ease of doing business. But, indices somehow ended slightly in green terrain, taking support from Aayog CEO Amitabh Kant’s statement India's improved ease of doing biz ranking is a huge achievement but there is a scope of improvement on some parameters. Some support also came with report that notwithstanding global & domestic economic uncertainties, private equity funds recorded an all-time-high investment of $9.4 billion in the third quarter this year, driven by big-ticket transactions. Finally, the BSE Sensex gained 37.67 points or 0.10% to 39,058.06, while the CNX Nifty was up by 1.30 points or 0.01% to 11,583.90.