Markets likely to make gap-down opening on weak global cues

Indian equity markets ended in red on Wednesday as investors assessed geopolitical developments after a huge explosion at a Gaza hospital derailed the diplomatic efforts led by the US to mobilize support for Israel’s right to defend itself. Today, markets are likely to make gap-down opening on weak cues from global markets amid rising crude oil prices. Sentiments may remain weak as US Treasury yields jumped to multiyear highs, with the 10-year Treasury yield breaking above 4.9% for the first time since 2007. Further, foreign fund outflows likely to dent sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) sold shares worth Rs 1,831.84 crore on October 18.  Traders make take note of report that the Directorate General of Goods and Services Tax Intelligence (DGGI) has detected tax evasion amounting to Rs 1.36 trillion in the current financial year, recovering Rs 14,108 crore. This figure includes 1,040 cases of bogus input tax credit, valued at Rs 14,000 crore. So far, 91 individuals involved in fraud have been apprehended. However, some respite may come later in the day as private report said it expects GDP growth in the current fiscal to be in the range of 6.5-6.8 per cent primarily due to upcoming festive spending as well as higher government expenditure before the national elections mid-next year.  Meanwhile, other private report said India is determined to ensure a trusted supply chain for its digital ecosystem and will not compromise on the security of the internet. There may be some buzz in electric vehicles industry related stocks as Heavy Industries Secretary Kamran Rizvi expressed hope that about 60-70 per cent of the total two-wheelers on the road will be electric by 2030.

Asian markets are trading mostly in red in early deals on Thursday following weak cues from global markets overnight. The US markets ended deeply in red on Wednesday amid rising tensions in the Middle East, and higher bond yields on concerns about the outlook for interest rates.

Back home, Indian equity benchmarks reeled under heavy selling pressure and finally settled near day’s lows on Wednesday as persistent concerns about elevated oil prices, US interest rates, and the Middle East conflict weighed on investor sentiments. After making a cautious start, key gauges gradually drifted lower as traders got anxious with ratings agency ICRA’s statement that borrowing costs for state governments and union territories are expected to increase in the second half of Financial Year 2023-24 (FY24) on rising bond yields and widening of spreads up to 15 basis points. Some pessimism also came as a private report said that the much anticipated free trade agreement between India and the United Kingdom is likely to be delayed yet again owing to certain differences between the two countries, especially on the question of trade in goods and services. The street paid no heed towards credit rating agency, India Ratings and Research’s (Ind-Ra) latest report stating that the corporate credit profile continued its robust performance in first half of the current financial year (H1FY24), third year in a row. Among the sectors which witnessed positive rating actions are infrastructure asset operators, largely from the renewable power sector. Traders also overlooked the provisional data available on the NSE showing that foreign institutional investors (FII) purchased shares worth net Rs 263.68 crore on October 17, 2023. Traders took a note of report that the Centre announced a cut on the windfall tax on petroleum crude, aviation turbine fuel, and diesel. As per a government notification, the special additional excise duty (SAED) on crude petroleum has now been reduced to Rs 9,050 per tonne from Rs 12,100 per tonne, effective October 18. The Centre had raised the windfall tax on petroleum crude to Rs 12,100 per tonne from Rs 10,000 per tonne on September 30. Finally, the BSE Sensex fell 551.07 points or 0.83% to 65,877.02 and the CNX Nifty was down by 140.40 points or 0.71% to 19,671.10.