Markets to open marginally in green on Wednesday

Indian markets rallied on Tuesday with gains of over one percent each, led by the strong buying in auto and metal index. Today, the markets are likely to make a flat-to-positive start amid fall in crude oil prices. Traders will be taking encouragement with report that the Department for Promotion of Industry and Internal Trade (DPIIT) has kickstarted an exercise to relax India’s foreign direct investment (FDI) norms. The department held an inter-ministerial meeting to discuss further opening up in sectors, especially where 100% FDI is not allowed on the automatic route. Some support may come with report that the finance ministry and regulators are reviewing the possibility of scrapping the dividend distribution tax (DDT) in a bid to regain investor confidence in the equity markets. It is also considering rationalisation of the long-term capital gains (LTCG) taxation structure by classifying three asset classes against six at present. Traders may take note of report that Prime Minister Narendra Modi called upon global investors to benefit from India's vibrant start-up ecosystem, which stands as the third-largest in the world, adding that he firmly believes that any investment in India's innovation sector would yield huge returns. However, weak global cues may weight on market sentiments. Telecom stocks will in focus amid report that the Centre has set up a Committee of Secretaries under the cabinet secretary to suggest measures to alleviate financial stress in the telecom sector. The committee will look at ways of creating a favourable investment environment for the sector. There will be some reaction in oil & gas stocks with Prime Minister Narendra Modi’s statement that India will invest $100 billion in oil and gas infrastructure to meet energy needs of an economy that is being targeted to nearly double in five years, as he sought investment from oil kingpin Saudi Arabia and other nations to boost supplies. There will be some buzz in the metal stocks with report that India's steel production growth rate slowed down to a 5-month low of 1.6% in September this year due to the slump in key sectors like automobiles, consumer durables and a decline in spending on infrastructure. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended lower on Tuesday as investors looked ahead to key Federal Reserve meeting. Asian markets are trading mostly in red on Wednesday as the prospect of a rate cut by the Federal Reserve was countered by worries that Sino-US first-stage trade deal could be delayed.

Back home, bulls rejuvenate on Dalal Street post Diwali session and markets rallied around one and a half percent on Tuesday. The investors’ mood remained up-beat throughout the day and there appeared not even an iota of profit booking, as investors continued hunt for fundamentally strong stocks. Soon after making marginal positive start, markets gained traction as traders took 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 also came 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. Adding optimism, Central Board of Indirect Taxes and Customs (CBIC) favored extending incentives based on parameters like job creation and committed investments across the country. Markets extended gains and settled above their crucial 39,800 (Sensex) and 11,750 (Nifty) levels with a report that Prime Minister Narendra Modi embarked on a two-day visit to Saudi Arabia to help draw investments and bolster bilateral ties, with a dozen agreements expected to be signed in sectors, including energy, Defence procurement and civil aviation. Besides, Union Steel Minister Dharmendra Pradhan said that India will spend about $1.4 trillion on its infrastructure development in the next five years. Meanwhile, urging government to probe the business model of e-commerce majors, the Confederation of All India Traders (CAIT) has said that deep discounts on products by them are causing loss of Goods and Services Tax (GST) revenue to the Centre and state governments. However, traders ignored a private report that declining for the fourth consecutive month, consumer confidence in the month of October nosedived by 3.5% tracking pessimism around jobs, economy, finances, and investment. Finally, the BSE Sensex gained 581.64 points or 1.48% to 39,831.84, while the CNX Nifty was up by 159.70 points or 1.37% to 11,786.85.