Markets likely to get gap-down opening of new week

Indian markets ended on a flat note in the highly volatile session on October 7, as investors remain concerned amid the rupee hit fresh high. Today, markets are likely to get gap-down opening of new week amid sell-off in global markets. There will be some cautiousness as the Reserve Bank of India's (RBI) weekly statistical supplement showed that India's foreign exchange reserves fell to $532.66 billion in the week through Sept. 30, their lowest level since July 2020. Traders may take note of Union Finance Secretary T V Somanathan’s statement that India has a nano demographic window to achieve developed country status, and if it misses, it may not reach there. He said the country has to grow at a rate of 8-8.5 per cent to reach developed country status. However, some respite may come later in the day as Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal said India will perhaps emerge as the strongest major economy with 7 per cent growth rate in FY23 amid fears of the world slipping into recession. Sanyal observed that India can grow at 9 per cent in an external conducive environment like in early 2000s when the global economy was growing. Some support may also come as the tax department said the gross collection of tax on corporate and individual earnings jumped nearly 24 per cent so far in the current fiscal year to Rs 8.98 trillion. This includes a 32 per cent growth in personal income tax (including Securities Transaction Tax) mop up and 16.73 per cent increase in corporate tax revenues over the same period last year. Meanwhile, the government on October 10, 2022 will kick off its annual Budget making exercise for financial year 2023-24, that is expected to look at measures to revive growth amid a gloomy global outlook. Metal stocks will be in focus with a private report stating that India's crude steel output rose by 2.56 per cent to 30.06 million tonne (MT) during the July-September period of the ongoing financial year. There will be some reaction in oil industry stocks as the government data showed that India's monthly fuel demand in September was at the lowest since November 2021. Total monthly fuel demand in September fell 3.6% from August, although it was up 8.1% when compared with September 2021. Road and infrastructure industry stocks will be in limelight as government report stated that the road transport and highways sector has the maximum number of delayed projects at 248, followed by railways at 116 and petroleum sector at 88. Meanwhile, IT major Tata Consultancy Services will kick off the Q2 earnings today.

The US markets ended sharply lower on Friday following a solid jobs report for September that increased the likelihood the Federal Reserve will barrel ahead with an interest rate hiking campaign many investors fear will push the U.S. economy into a recession. Asian markets are trading in red on Monday after a surprise drop in US unemployment quashed any thought of a pivot on policy tightening ahead of a reading on inflation which is expected to see core prices move higher again.

Back home, In a volatile trade, Indian Benchmark indices erased most of their initial losses and ended flat with negative bias on Friday weighed by Oil & Gas and Energy stocks amid a weak trend in global equity markets. Markets made negative start and stayed in red for whole day as traders were concerned as the World Bank projected a growth rate of 6.5 per cent for the Indian economy for the fiscal year 2022-23, a drop of one per cent from its previous June 2022 projections, citing deteriorating international environment. It added that private investment growth is likely to be dampened by heightened uncertainty and higher financing costs. Some anxiety also came with a private report stated that India's rupee will trade near its record low against the mighty greenback beyond this year, buffeted by rising oil prices and an aggressive U.S. Federal Reserve rate-hiking campaign. However, key gauges managed to trim most of their initial losses in late afternoon deals, as traders took some support with Chief economic adviser V Anantha Nageswaran’s statement that India is still on course for 7% growth in the current fiscal year although downside risks dominate the upside risk but it's better placed than other countries. Some support also came as the Department of Expenditure, Ministry of Finance, has released the 7th monthly instalment of Post Devolution Revenue Deficit (PDRD) grant of Rs 7,183.42 crore to 14 states. With the release of seventh instalment for the month of October, 2022, the total amount of Revenue Deficit Grants released to the states in current fiscal has gone up to Rs 50,282.92 crore. Besides, as per provisional data available on the NSE, foreign institutional investors (FIIs) remained net buyers to the tune of Rs 279.01 crore on October 6. Finally, the BSE Sensex fell 30.81 points or 0.05% to 58,191.29 and the CNX Nifty was down by 17.15 points or 0.01% to 17,314.65.