Benchmarks likely to make cautious start on Tuesday

Indian markets ended higher on Monday amid reports of further tax reforms. Today, the markets are likely to make flat-to-negative start amid rise in crude oil prices. Investors will be eyeing Services PMI data to be out later in the day. Traders will be concerned with SBI report stating that India's Gross Domestic Product (GDP) growth is likely to slow further in the July-September quarter of this financial year to below 5 per cent amid decline in consumption, weak investments and an under-performing service sector. Also, a private report said that despite efforts mounted by the government, demand has been muted during the festive time, and this leads to a 0.30 percent cut in FY20 GDP growth forecast to 5.8 percent. There will be some cautiousness with report that India has decided not to join the mega Regional Comprehensive Economic Partnership (RCEP) deal as negotiations failed to address the government’s concerns. However, some respite may come later in the day with positive global cues. Meanwhile, the Securities and Exchange Board of India (SEBI) has said that listed Indian firms' employees, including foreign nationals, are required to follow the code of conduct while trading in American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). Banking stocks will be in focus with ICRA’s report that growth in bank credit may decelerate sharply to 8-8.5 percent during 2019-20 from 13.3 percent last fiscal, mainly due to a decline in incremental credit in the first half of the current financial year. There will be some reaction in NBFCs as Reserve Bank asked the already fund-starved NBFCs to adopt better risk monitoring tools that capture the strains early on and also to maintain a liquidity buffer as per the mandated liquidity coverage ratio. Also, there will be some buzz in the IT stocks as Finance Minister Nirmala Sitharaman unveiled two new information technology (IT) initiatives for improved monitoring of clearance of the imported goods and making it easier for international passengers to arrive in India. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended higher on Monday as investors reveled in strong economic data, blockbuster earnings and trade optimism. Asian markets are trading mostly in green on Tuesday on increasing signs the US and China are inching closer to a truce in their trade war.

Back home, Indian equity markets settled higher on Monday, with the Sensex and the Nifty gaining over 130 and 50 points, respectively. The start of the day was optimistic, aided with Prime Minister Narendra Modi’s statement that the country is among the top 10 destinations for foreign direct investment (FDI) in the world and had received $286 billion of FDI in the last five years. Adding some comfort, the Reserve Bank of India’s (RBI) data report showed that India's forex reserves increased by $1.832 billion to a new lifetime high of $442.583 billion in the week ended October 25, helped by a jump in core currency assets and value of gold. Volatility hit over street during noon deals which brought the markets off day’s high points, amid Centre for Monitoring Indian Economy’s report highlighting that India’s unemployment rate rose to 8.5% in October 2019, the highest level since August 2016. Separately, Goods and Services Tax collection declined by 5.29 per cent to Rs 95,380 crore in the month of October 2019, as against Rs 1,00,710 crore in the same month a year ago. But, indices remained in green for whole day to end higher, amid reports that India is likely to make a strong pitch for exports of its Pharma, IT and agricultural products among others at China's second International Import Expo to be opened at Shanghai on November 5. Finally, the BSE Sensex gained 136.93 points or 0.34% to 40,301.96, while the CNX Nifty was up by 50.70 points or 0.43% to 11,941.30.