Sensex, Nifty likely to make pessimistic start on Friday

Indian markets settled lower on Thursday as except IT and energy, all other sectoral indices ended lower led by FMCG, pharma, metal, and auto. Today, the start of session is likely to be pessimistic following two consecutive day’s losses amid weakness in Asian peers. Traders will be concerned as the government data showed that contracting for the seventh consecutive month, the output of eight core infrastructure sectors dropped by 0.8 percent in September, mainly due to decline in production of crude oil, natural gas, refinery products and cement. The production of eight core sectors had contracted 5.1 percent in September 2019. There will be some cautiousness as the government's fiscal deficit rose to Rs 9.14 lakh crore, about 114.8 percent of the annual budget estimate, during the first six months of the current financial year, mainly on account of poor revenue realisation. The revenue realisation during the current fiscal suffered on account of the lockdown imposed by the government to check the spread of coronavirus pandemic. Besides, the World Bank said remittances to India would fall this year by nine percent to $76 billion due to the ongoing coronavirus pandemic and global economic recession. Meanwhile, according to Worldometer, coronavirus cases in India jumped to 8,088,046 with the addition of 49,281 new infections on Friday as the death toll peaked to 121,131. However,  some support may come later in the day with report that the Reserve Bank of India will conduct the second Open Market Operations (OMOs) purchase of State Developments Loans (SDLs), aggregating Rs 10,000 crore, on November 5, 2020. Traders may take note of report that Reserve Bank of India (RBI) Governor Shaktikanta Das has underlined the need for strengthening the preventive vigilance framework to increase efficiency, stressing that it was also critical for ensuring good governance. Gold related stocks will be in focus as the World Gold Council (WGC) said gold demand of India is likely to recover in the fourth quarter (Q4) after falling 30% in the previous quarter as festivals are expected to strengthen retail jewellery purchases. There will be some important earnings announcements too to keep the markets buzzing.

The US markets closed higher on Thursday even though big tech companies like Apple, Amazon, Alphabet, and Facebook could not cheer Wall Street. Asian markets are trading in red on Friday as jitters over upcoming US presidential elections and fears that the global economic downturn will persist enveloped markets.

Back home, in choppy session, Indian equity benchmarks declined for second straight session on Thursday, dragged down by weakness in heavyweights like Larsen & Toubro, Titan Company, ONGC and Axis Bank as future and derivative contracts for October expired. The benchmarks opened lower and extended losses in afternoon trading, as sentiments were dampened with report that India has reported a daily jump of nearly 50,000 Covid-19 cases, even as the tally has soared past the 8-million mark. The country's death toll has mounted to 120,563. Market participants also took a note of Chief Economic Adviser K V Subramanian’s statement that non-banking financial companies (NBFCs) need to follow prudential measures to ensure that risks do not mount and be vigilant about the quality of lending in these difficult times. The losses, however, were modest as compared to their other global peers, as traders found some support with domestic credit rating agency Crisil’s report that financial conditions in India have staged a speedy recovery from the harrowing abyss they had been sent flailing into by the coronavirus disease (covid-19) pandemic in April, 2020. It said the Reserve Bank of India’s (RBI) measures have helped mitigate the large and broad-based economic damage caused by the pandemic. Adding optimism, Union Finance Minister Nirmala Sitharaman stated that she was closely monitoring the progress of Micro Small Medium Enterprises (MSMEs), whom she called as the growth engine of the country. Meanwhile, the Commerce and Industry Ministry has released the next edition of its consolidated foreign direct investment (FDI) policy document, incorporating all the changes made over the past year. Finally, the BSE Sensex fell 172.61 points or 0.43% to 39,749.85, while the CNX Nifty was down by 58.80 points or 0.50% to 11,670.80.