Markets likely to make positive start tracking gains in Asia

Indian markets slid for the fifth day in a row on Friday as FMCG, auto and energy shares succumbed to intense selling and foreign fund outflows triggered by escalating tensions in West Asia. Today, markets are likely to make positive start on the back of gains in Asia and improving investor sentiment ahead of the MPC policy announcement scheduled for Wednesday, October 9. As per a private report, the Reserve Bank is unlikely to cut the benchmark interest rate in its forthcoming bi-monthly monetary policy review later in the week as retail inflation is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices. Sentiments will get boost as a survey by Confederation of Indian Industry (CII) showed that private capital expenditure by India Inc. is likely to increase amid improving domestic demand despite a weak external environment and rising shipping costs. The survey, conducted with over 200 firms of varying sizes, showed that CII's Business Confidence Index between July and September (Q2 FY25) rose to its highest since March at 68.2. Some support will come as the Reserve Bank said India’s forex reserves jumped by $12.588 billion to a new all-time high of $704.885 billion for the week ended September 27. The overall kitty had swelled by $2.838 billion to $692.296 billion in the previous reporting week. Besides, think tank GTRI said the escalation in the US-China trade war is expected to help India increase its exports and attract investments from American companies. It said that the two bills introduced by the US Senate- Neither Permanent Nor Normal Trade Relations Act (PNTR Act) and the Axing Non-Market Tariff Evasion (ANTE) Act create potential for growth in local industries as companies look to move production away from China. Meanwhile, Commerce and Industry Minister Piyush Goyal has said that India will continue to engage with the US on the proposed social security or totalisation pact and it will take time. However, some cautiousness may come with report that foreign investors turned net sellers in October, offloading shares worth Rs 27,142 crore in just the first three days of October due to intensifying conflict between Israel and Iran, a sharp rise in crude oil prices, and improved performance of Chinese markets. Road logistic stocks will be in focus as ICRA said the domestic road logistics industry is expected to register a growth of up to 9 per cent in revenues in the ongoing 2024-25 financial year. It added the organised road logistics sector had witnessed a growth 4.6 per cent in the 2023-24 fiscal year. There will be some reaction in banking stocks with a private report that banks recorded a higher growth year-on-year (Y-o-Y) in raising deposits during the second quarter of financial year 2025 (Q2FY25) compared to Q1FY25, owing to intensified efforts to raise liabilities by offering higher rates and innovative schemes.

The US markets ended in green on Friday driven by a stronger-than-expected jobs report that boosted investor confidence in the economy. Asian markets are trading mostly higher on Monday after blowout US labour data dispelled fears of a recession and spurred a sharp paring of rate-cut bets.

Back home, in a highly volatile session, Indian equity benchmarks extended losing streak for the fifth straight session and ended with losses of around a percent each, amid escalating geopolitical tensions. All major sectors, except IT, succumbed to the pressure, with FMCG, Realty and Auto among the top losers. Key gauges made a negative start and soon turned volatile as traders got anxious with exchange data showing that Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, offloading shares worth Rs 15,243.27 crore on a net basis in the cash segment. FIIs have sold shares worth over Rs 30,000 crore since Monday. But, markets recovered in late morning deals, as traders found solace after CareEdge Global IFSC, a subsidiary of CARE Ratings, has assigned a BBB+ rating to India, reflecting the country’s strong post-pandemic recovery and its focus on infrastructure investments. CareEdge Global’s assessment highlights India’s resilient economic performance, projecting GDP growth in the range of 6.5-7 per cent in the coming years. However, in the second half, profit booking at higher level dragged the indices to settle near the day’s lows as some pessimism remained among traders with report that India’s services sector activity eased in the month of September, as new business, international sales and output all rose at the slowest rates since late-2023. According to the survey report, the seasonally adjusted HSBC India Services PMI Business Activity Index fell to 57.7 in September from 60.9 in August. Further, the HSBC India Composite PMI Output Index -- which measures both manufacturing and services -- also eased to 58.3 in September as against 60.7 in August. Besides, the ongoing geopolitical tensions have driven crude prices higher, dampening hopes for a rate cut by the RBI in the upcoming policy meeting. Finally, the BSE Sensex fell 808.65 points or 0.98% to 81,688.45, and the CNX Nifty was down by 235.50 points or 0.93% to 25,014.60.