Markets likely to make flat-to-positive start amid mixed global cues

Indian markets ended higher on Thursday on account of gains across sectors led by financial, IT and metal. The Indian market remained closed on Friday for Dussehra holiday. Today, the start of new week is likely to be flat-to-positive amid mixed global cues. Traders will be taking encouragement as Minister of State for External Affairs V Muraleedharan said The Indian economy is bouncing back strongly, domestic consumption is increasing and industrial production is at pre-COVID level, he also emphasized that the reforms implemented by the government has provided fillip to the business ecosystem in the country. Traders may take note of report that Union Finance Minister Nirmala Sitharaman said The Indian government remains committed to bring the economy on the path of fiscal consolidation in the near-to-medium term, setting the target to reduce fiscal deficit to 4.5 per cent by 2025-26. However, traders may be concerned as data released by the government showed India's merchandise trade deficit widened to a record $22.6 billion in September, the highest in at least about 14 years, as crude oil and gold imports surged. There may be some cautiousness with report that the sharp economic recovery and rising demand post the second wave of Covid coupled with a spike in global oil prices may pose a challenge for the government in FY22 to maintain fiscal discipline amid good growth in tax revenue. Country's crude oil Import bill that fell drastically last year in the absence of demand and soft oil prices, has risen by over 138 per cent in April-August of FY22 to $ 42 billion, up from close to $ 18 billion the same period of last year. Aviation industry stocks will be in limelight as the Ministry of Civil Aviation allowed airlines to operate at 100 percent capacity. There will be some buzz in jewelry industry stocks as data from the Commerce Ministry showed that Gold imports, which have a bearing on the current account deficit, zoomed to about $ 24 billion during April-September 2021 due to higher demand in the country. Power stocks will be in focus as power ministry data showed that India's power consumption grew 3.35 per cent in the first half of October to 57.22 billion units (BU), showing recovery amid coal shortage at electricity generation plants. There will be some reaction in sponge iron industry as Sponge Iron Manufacturers Association (SIMA) stated that the domestic sponge iron industry might report a negative growth in the ongoing December quarter if the shortage of coal is allowed to continue. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended higher on Friday after Goldman Sachs rounded out a strong earnings season for big banks. A surprise rise in retail sales strengthened views about economic recovery. Asian markets are trading mostly in red on Monday ahead of the release of Chinese economic data for the third quarter.

Back home, Indian equity benchmarks extended their winning run to sixth consecutive trading session and posted record closing highs yet again on Thursday. Barring auto index, buying demand was seen across the board with banking, PSU and metal stocks moving the most. After opening in the green, the markets witnessed the continuation of a positive trend, as sentiments got boost with Retailers Association of India (RAI) said retail sales in September this year were at 96 per cent of the pre-pandemic levels of the same month in 2019 as the sector shows signs of recovery. Support also came with World Bank president David Malpass’ statement that the Indian economy that was hit hard by the COVID-19 pandemic is now in recovery mode. He also said that India, which faces huge challenges of integrating more people into the formal sector economy and raising the earnings of the people, has made some progress but that's not enough. Key benchmark indices added more points in late afternoon session as India’s inflation based on wholesale price index (WPI) eased to 10.66% in the month of September as against 11.39% in August. The annual rate of inflation is 10.66% (Provisional) for the month of September 2021 as compared to 1.32% in September 2020. Traders also took a note of the International Monetary Fund (IMF) stating that as the Indian economy recovers from the COVID-19 pandemic that hit it hard, it is important for the country to focus on public investment, particularly in green sectors so that the recovery can be inclusive and green. Traders were also took support as Foreign institutional investors (FIIs) stood as  net buyers in the capital market, as they purchased shares worth Rs 937.31 crore on Wednesday, as per exchange data. Meanwhile, Members of the influential US India Business Council in their meeting with Union Finance Minister Nirmala Sitharaman has praised India’s reform trajectory and exuded confidence in the growing Indian economy. Finally, the BSE Sensex rose 568.90 points or 0.94% to 61,304.95 and the CNX Nifty was up by 176.80 points or 0.97% to 18,338.55.