Markets likely to get gap-down opening amid rising tensions in Middle East

Indian markets ended flat with a negative bias on Tuesday amid a widening current account deficit and weak manufacturing data. Domestic indices remained closed on Wednesday, in observance of Gandhi Jayanti. Today, markets are likely to get gap-down opening amid rising tensions in the Middle East. Several reports indicate that the Israeli military has confirmed the deaths of eight soldiers, including a team commander, during ground operations in southern Lebanon. This escalation follows missile attacks from Iran targeting Tel Aviv, with Israel's military chief warning of an imminent response to Iran. The foreign institutional investors (FIIs) extended their selling as they sold equities worth Rs 5,579 crore on October 1, may dampen sentiments in the markets. Some cautiousness will come as the Securities and Exchange Board of India’s (Sebi’s) six-step plan to curb retail participation in speculative index derivatives may lead to a substantial drop in volumes - potentially by 30-40 per cent. These measures aim to reduce excessive speculation in the futures and options (F&O) segment, where daily turnover often exceeds Rs 500 trillion and retail investors end up on the losing side of the trade more often. Traders will be cornered as Goods and services tax (GST) revenue growth rate declined to 6.5 per cent in September at Rs 1.73 lakh crore as the rise in collections from domestic transactions as well as imports slowed. In August 2024, the mop-up was Rs 1.75 lakh crore. Besides, a labour ministry statement said retail inflation for industrial workers inched up marginally to 2.44 per cent in August against 2.15 per cent in July this year. The All-India CPI-IW (Consumer Price Index-Industrial Workers) for August 2024 decreased by 0.1 points and stood at 142.6 points. Investors will be eyeing the Services PMI data to be out later in the day for more directional cues. There will be some reaction in NBFCs stocks as Crisil Ratings asserted that non-banking financial companies (NBFCs) are increasingly attempting to access funding sources beyond banks, such as through non-convertible debentures (NCD), commercial papers (CP), foreign currency borrowings (FCB) and securitisation, to continue their growth march. Agriculture sector stocks will be in focus as data made available by state-run weather bureau India Meteorological Department showed southwest monsoon rains in India hit four years high this season, experiencing about 108 per cent of the long period average at 934.8 mm. A rainfall of 868.6 mm is the long period average in India. Above-normal monsoon rains helped farmers sow more crops this Kharif season and it bodes well for the overall agriculture sector, which is the mainstay source of livelihoods for millions of Indians. Meanwhile, KRN Heat Exchanger and Refrigeration is set to make market debut today.

The US markets ended higher on Wednesday with technology shares gaining, but investors are nervous about Middle East tensions and more U.S. labor data due this week. Asian markets are trading mixed on Thursday as investors curb their risk appetite amid an escalation of the Middle East conflict.

Back home, Indian equity benchmarks ended flat with negative bias in the volatile session on Tuesday due to losses in Telecom, Oil & Gas and Energy stocks.  After making a cautious start, markets traded in green terrain as traders took support with NITI Aayog CEO B V R Subrahmanyam’s statement that India's industrial sector is growing at a fast pace and the country can now aim to achieve 9% plus economic growth. Subrahmanyam said India's manufacturing sector has been generating sufficient number of jobs. According to the Annual Survey of Industries (ASI) data, the number of persons employed in manufacturing industries rose 7.5% in 2022-23 to 1.85 crore from 1.72 crore in the previous year. However, the markets erased all gains in morning deals to trade marginally lower as traders turned cautious with the Ministry of Commerce & Industry’s data showing that the output of eight core industries contracted for the first time in nearly four years by 1.8 per cent in August 2024 due to decline in output of coal, crude oil, natural gas, refinery products, cement and electricity. In August 2023, the core sector’s output had grown 13.4% and in July 2024, it had grown by 6.1%. Markets continued their lackluster trade in late afternoon deals, as the HSBC final India Manufacturing Purchasing Managers' Index, compiled by S&P Global, fell to 56.5 last month (September) from 57.5 in August - the weakest since January - and slightly below a preliminary estimate of 56.7. Growth in India's manufacturing industry cooled to an eight-month low in September as solid demand and output eased slightly. Some concern also came as data showed the foreign institutional investors (FIIs) extended their selling as they sold equities worth Rs 9792 crore on September 30.  Meanwhile, the data released by the Controller General of Accounts (CGA) has showed that the Centre’s fiscal deficit - the gap between expenditure and revenue - at the end of the first five months (April-August) of the current fiscal (FY25) touched 27 per cent of the full-year target. The deficit stood at 36 per cent of the Budget Estimates (BE) in the corresponding period of 2023-24. Finally, the BSE Sensex fell 33.49 points or 0.04% to 84,266.29, and the CNX Nifty was down by 13.95 points or 0.05% to 25,796.90.