Markets likely to get positive start tracking gains in global counterparts; CPI, WPI data eyed

Indian markets ended lower on Friday, dragged by selling in banking, utility and financial stocks. Unabated foreign fund outflows and a depreciating rupee amid geopolitical tensions also hit investors’ sentiment. Today, markets are likely to get positive start tracking gains in global counterparts. Some support will come as the Income-Tax (I-T) Department’s latest data showed that India’s net direct tax collection, after adjusting for refunds, grew 18.35 per cent to Rs 11.3 trillion between April 1 and October 10 of FY25. In the same period last year, tax collection stood at Rs 9.51 trillion. However, foreign fund outflows likely to dent sentiments in the markets. On October 11, foreign institutional investors (FIIs) sold shares worth Rs 4,162.66 crore. Investors will watch out for inflation and wholesale inflation figures for September to be out later in the day. The retail inflation for September is anticipated to exceed the Reserve Bank of India's (RBI) 4 per cent medium-term target for the first time since July, primarily due to escalating vegetable prices and a favourable year-ago comparison. Traders may be cornered as after a gap of nearly two years, India’s industrial production turned negative as it contracted by 0.1 per cent in August, mainly due to a decline in the mining and power generation sectors’ output, in addition to an almost flat expansion in the manufacturing sector. Besides, data from the Reserve Bank of India (RBI) showed India's foreign exchange reserves fell for the first time in eight weeks and came off a record high to stand at $701.18 billion as of October 4. Insurance industry stocks will be in focus as data released by the Life Insurance Council showed that life insurance companies reported a 14 per cent year-on-year growth in new business premiums for September, totaling Rs 35,020 crore. There will be some reaction in mining and construction equipment (MCE) industry stocks as ICRA in a report highlighted that India’s MCE industry is poised for significant growth, with localisation levels expected to increase to 70-80 per cent in the next 5-7 years. It also noted that this shift could help the industry save nearly $3 billion in foreign exchange annually and boost India’s cost competitiveness, enhancing its export potential. Meanwhile, market participants will be eyeing Q2 numbers of major players like HCL Tech and Reliance Industries (RIL) to be release later in the day. HCL Tech, India's third-largest IT firm, is likely to show a modest single-digit increase in both topline and bottomline compared to the same quarter last year. For RIL, investors forecast a challenging quarter due to weak refining margins, with expected profit declines. 

The US markets ended higher on Friday as bank shares jumped at the start of the quarterly earnings season. Asian markets are trading mostly in green on Monday as investors evaluated a weekend press briefing from China and prepared for a series of economic data releases in the region.

Back home, Indian equity benchmarks ended marginally lower on Friday, dragged by selling in Realty, Utilities and banking stocks as investors turned cautious ahead of key macroeconomic data, i.e. inflation and Index of Industrial Production (IIP) data. Markets made negative start and stayed in red for most part of the day as traders got anxious with a private report stating that India’s retail inflation, based on the Consumer Price Index, likely rose to 5.1% in September from 3.65% in August, primarily due to an unfavourable base effect. In September 2023, CPI inflation was at 5.02%. Some concern also came amid a private report stating that Reserve Bank of India's (RBI) decision to keep the repo rate unchanged and change the policy stance to neutral indicates that inflation is still the main concern for the central bank. Besides, a mixed trend in global equity markets and unabated foreign fund outflows also hit investors' sentiment. Exchange data showed Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,926.61 crore on Thursday. However, losses were limited as traders took some support as the World Bank retained India's gross domestic product (GDP) growth forecast for FY25 at 7% propelled by higher agricultural production and robust employment growth from policy initiatives, spurring private consumption. Also, the World Bank in its South Asia Development Update said India's manufacturing output would increase by 9 per cent if more women joined the workforce. Some support also came as the Union Government has released tax devolution of Rs 1,78,173 crore to State Governments on October 10, 2024, as against the normal monthly devolution of Rs 89,086.50 crore, in view of the upcoming festive season and to enable States to accelerate capital spending, and also finance their development/ welfare related expenditure. Meanwhile, the Securities and Exchange Board of India (Sebi) has extended the deadline to implement direct payout of securities to demat account from October 14 to November 11 to ensure a hassle free implementation. Finally, the BSE Sensex fell 230.05 points or 0.28% to 81,381.36, and the CNX Nifty was down by 34.20 points or 0.14% to 24,964.25.