Markets likely to make cautious start; IIP data eyed

Indian markets ended lower on Friday after rating agency Moody’s Investors Service downgraded India’s outlook to negative from stable on concerns that country's economic growth will remain materially lower than in the past. Today, the start of holiday truncated week is likely to be flat-to-negative following weakness in Asian peers and ahead of macro-economic data. Market-men will be eyeing the macro economic data of industrial production for September to be released after the market hours. There will be some cautiousness with report that the US and Indian trade negotiators ended talks on Friday without making major progress on a range of disputes over tariffs and other protectionist measures imposed by both sides that are straining bilateral ties. As per the report, Friday's talks were more about understanding each other's positions in various disputes. Traders will be concerned as a private report massively cut its GDP forecast for India to a low 4.9 percent for the year from 5.7 percent earlier, saying the economy is going through a deeper trough and even a sub-par recovery is at least a year away. Investors may also react to a report that as many as 355 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. Traders may take note of the Association of Mutual Funds India’s (AMFI) data that the net inflow in equity or growth-oriented mutual funds was recorded at around Rs 6,015 crore, the lowest in five months. However, some support may come later in the day with the latest depositories data showing that overseas investors remained net buyers in the domestic capital markets with an investment of over Rs 12,000 crore in the first week of November as market sentiments improved following economic reforms by the government. There will be some reaction in metal stocks with report that India's move to allow 100% foreign direct investment in coal mining is a positive move and a good policy enabler towards the country's long-term ambition of producing 300 million tonnes of steel per annum.

The US markets ended lackluster trade in green territory on Friday as traders digested conflicting information regarding negotiations of a US-China trade deal. Asian markets are trading lower on Monday with the ongoing trade war between the US and China set to take the spotlight this week.

Back home, Indian equity benchmarks failed to sustain Bull Run on Friday, with Sensex & Nifty ending lower by over 0.80% each. After a weak start, key indices remained in negative terrain for the most part of the session, as Moody's Investors Service cut India's credit rating outlook to negative from stable, citing a growing debt burden and the government's struggle to narrow the budget deficit. It said the country’s economic growth will remain materially lower than in the past. Adding more worries among traders, ICRA said that the government's Rs 25,000-crore fund to complete about 1,500 stalled affordable & mid-income housing projects is not adequate. Despite coming back in green territory during noon deals, key bourses remained unsuccessful to hold gains for longer period and again continued sluggish journey to close the session in negative terrain. Weakness persisted over the street, amid a private report stating that corporate India is forecasting deteriorating growth for the October-December period this year as optimism for new orders and sales prices have hit the lowest level in nearly 18 years. The Dun & Bradstreet Composite Business Optimism Index stood at 56.4 for December quarter this year, registering a decline of 19.5 percent as compared to the year-ago period. Finally, the BSE Sensex lost 330.13 points or 0.81% to 40,323.61, while the CNX Nifty was down by 103.90 points or 0.86% to 11,908.15.