Markets likely to open in green tracking firm global cues

Indian markets bounced back from early lows and ended higher on Monday following a rally in blue-chips ICICI Bank, HUL and HDFC Bank. Today, markets are likely to open in green tracking strengthening sentiment in global markets, that were focused on the upcoming Federal Reserve policy rate meeting scheduled for next week. Traders may take note of Union Minister of State for Ministry of Commerce and Industry Jitin Prasada’s statement that India is revising FTAs with South Korea, Malaysia and various other ASEAN countries to benefit the domestic industries. He also emphasised the importance of boosting exports, reducing import dependence and ensuring growth. Meanwhile, Atsushi Mimura, Vice Minister of Finance for International Affairs, Japan, and Ajay Seth, Secretary, Department of Economic Affairs, Ministry of Finance, held the 2nd India-Japan Finance Dialogue in Tokyo and agreed to continue discussions aimed at further promoting financial cooperation and strengthening bilateral relations. Besides, the Securities and Exchange Board of India (Sebi) has notified norms governing foreign venture capital investors (FVCIs), effectively bringing them on a par with those for foreign portfolio investors (FPIs). The amendments represent a comprehensive revamp of the registration and governance framework for FVCIs, ensuring greater parity. There will be some buzz in auto component industry stocks as Commerce Minister Piyush Goyal expressed confidence that the auto component sector will reach the $100 billion export target by 2030, making the sector one of the largest job creators in the country. Insurance company stocks will be in focus as GST Council headed by Union Finance Minister Nirmala Sitharaman decided to set up a Group of Ministers (GoM) on reducing tax rate on life and health insurance. There will be some reaction in chemical sector stocks as a report by Industry body Agro Chem Federation of India (ACFI) and EY titled 'Indian Agrochemical Industry: The Story, the challenges and the aspirations' noted that India's agrochemical exports could increase to over Rs 80,000 crore in the next four years provided the industry is facilitated with conducive environment. Jewellery industry stocks will be in limelight as a Crisil report stated that revenues of organised gold jewellery retailers are expected to surge by 22-25 per cent this fiscal year, driven by the sharp reduction in import duties on gold in the July Budget.

The US markets ended higher on Monday as investors looked for bargains after the previous week's sell-off while they also waited for inflation reports in coming days and the Federal Reserve's next policy decision next week. Asian markets are trading mostly in green on Tuesday following Wall Street's overnight rally, though concerns about a still-struggling Chinese economy kept sentiment in check.

Back home, Indian equity benchmarks bounced back from early lows and ended higher on Monday led by gains in FMCG, Banking and Consumer Durables stocks. Markets opened on a weak note and traded with volatility in first half, weighed down by concerns over a potential recession in the US following weaker-than-expected jobs data. Some concern also came as exchange data showed Foreign Institutional Investors (FIIs) offloaded equities worth Rs 620.95 crore on Friday.  Traders also remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out later in the week. However, markets stabilized in second half of trading session and managed to close in the green, as traders found support with RBI data showing that India's forex reserves jumped by $2.299 billion to a new high of $683.987 billion for the week ended on August 30. In the previous reporting week, the forex reserves had jumped by $7.023 billion to a high of $681.688 billion. Some support also came with a private report stating that food inflation, which has moderated a bit lately is further expected to come down in the coming months, citing progressing Southwest monsoon and sufficient water in reservoirs across regions. Meanwhile, Union Minister of Commerce and Industry, Piyush Goyal has suggested that the government should have a working group on tourism between the nations of the Mediterranean and India, as there is a huge potential for cooperation and mutual benefit. He said that India offers a large market for Mediterranean goods and services given the close connection both nations have shared over the decades. Finally, the BSE Sensex rose 375.61 points or 0.46% to 81,559.54, and the CNX Nifty was up by 84.25 points or 0.34% to 24,936.40.