Markets likely to get flat-to-positive start on Thursday

Indian markets settled on Wednesday’s trade in red terrain, with the Nifty below 25,000 amid selling across sectors barring realty. Today, markets are likely to get flat-to-positive start tracking gains on global peers. Sustained fall in crude oil prices likely to aid domestic sentiments. Oil prices held near a two-week low on Wednesday after dropping about 7% over the prior three days on forecasts for less oil demand growth and an easing in worries that Middle East conflicts will result in supply disruptions. Traders likely to continue to take support with the government data showing that India’s trade deficit narrowed to a five-month low of $20.8 billion in September from $29.7 billion a month back, as merchandise export growth turned positive for the first time in three months. India’s merchandise exports in September slightly rose to $34.58 billion against $34.41 billion a year ago. Imports increased by 1.6 per cent to $55.36 billion in September compared to $54.49 billion in the year-ago period. Besides, in a pre-Diwali boost for farmers, the Central Government has announced an increase in the Minimum Support Price (MSP) for key rabi crops for the 2025-26 marketing season. The new MSP rates aim to ensure farmers receive a fair value for their harvests. However, foreign fund outflows likely to dent sentiments. On October 16, foreign institutional investors (FIIs) sold shares worth Rs 3,435.94 crore. Some cautiousness may creep in as geopolitical woes continue. The US is deploying its THAAD anti-missile system to Israel following an Iranian missile attack. THAAD is designed to intercept ballistic missiles at high altitudes and integrates with other US defence systems. There may be some wariness as rating agency ICRA reportedly expects the tax devolution in FY25 to be in line with the amount indicated by the government in the Union Budget published in July 2024. Traders may take note of report that Union Commerce Minister Piyush Goyal has stressed the need to manufacture high-quality products, saying without this approach it is going to be very difficult to make India truly competitive. Renewable energy industry stocks will be in focus after a report by CRISIL stated that India’s renewable energy capacity is expected to grow at twice the rate of the country’s overall energy capacity growth. Telecom stocks continue to remain in limelight after the second day of Indian Mobile Congress (IMC) telecom industry leaders discussed India’s tremendous opportunity in advancing 6G technology at the 8th Edition of Indian Mobile Congress (IMC) 2024. The second day of the event saw the inauguration of International 6G Symposium, launch of Telecom Smart Cities Index. Meanwhile, the markets will be monitoring Q2 results from companies including Infosys, Wipro, Axis Bank, Nestle India, LTIMindtree, Tata Chemicals, Ceat, and Havells India, among 18 others.

The US markets ended higher on Wednesday helped along by a rotation out of megacap tech and into economically sensitive shares including smaller companies. Asian markets are trading mostly in green on Thursday tracking gains on Wall Street overnight.

Back home, Indian equity benchmarks ended lower for the second consecutive session on Wednesday due to weak trend in global markets. Markets made a cautious start and soon slipped into red as traders got anxious with Reserve Bank of India (RBI) data showing that India’s outward foreign direct investment (FDI) commitments declined by about $900 million to $3.72 billion in September 2024, compared to $4.63 billion in September 2023. Some cautiousness also came as SBI research stated that the soaring figures of retail inflation in September could force the Reserve Bank of India (RBI) to continue with neutral stance for a longer duration, and added that first rate cut could be based on growth, and need not be inflation. The research stated on the rationale that if inflation remains sketchy in the coming months, the apex bank will consider growth as the criteria for rate cut. Key gauges extended their losses in afternoon session amid unabated foreign fund outflows. Foreign Institutional Investors (FIIs) sold equities worth Rs 1,748.71 crore on Tuesday, continuing a month-long selling spree. However, markets pared most of their losses in late afternoon deals as traders took some support with report that Reserve Bank of India (RBI) deputy governor Michael Debabrata Patra has said the retail inflation is projected to average 4.5 per cent in 2024-25 and align with the target on a durable basis by 2025-26. Some support also came with private report stated that India’s trade deficit narrowed to a five-month low of $20.8 billion in September from $29.7 billion a month back as merchandise export growth turned positive for the first time in three months. However, markets failed to hold recovery and added some losses towards the end of the session, as investors mostly resorted to selective profit-taking, particularly in IT, Auto and TECK stocks. Finally, the BSE Sensex declined 318.76 points or 0.39% to 81,501.36, and the CNX Nifty was down by 86.05 points or 0.34% to 24,971.30.