Markets likely to get cautious start amid gains in global peers

Indian markets snapped three-day losing run and ended higher with decent gains on Friday led by value buying in banking, financials and metal stocks and firm global market trends. Today, markets are likely to get cautious start amid mixed cues from Asian counterparts. Traders will be concerned as data shared by the Reserve Bank of India (RBI) showed that India's foreign exchange reserves have experienced a notable decline for the second consecutive week, dipping by $10.7 billion to stand at $690 billion as of October 11. There will be some cautiousness as the NCAER-NSE Business Expectations Survey showed that economic activity continued to show dynamism in the second quarter of 2024-25, though at a moderated pace. The survey said after improving for two consecutive quarters, business sentiments moderated in the second quarter of 2024-25 (134.3) compared to the first quarter (149.8) as well as the corresponding quarter of 2023-24 (140.7). Traders may take note of Reserve Bank Governor Shaktikanta Das’ statement that this stage would have been premature and very very risky as the retail inflation is still high, and future monetary policy action would depend upon the income data and outlook. Das said the September inflation was high and the next print too is expected to remain elevated before moderating. Meanwhile, a group of ministers (GoM), tasked by the Goods and Services Tax (GST) Council to look at rate rationalisation, has suggested changes in rates of multiple goods, as well as moving of shoes and watches priced above a certain threshold to the 28% tax bracket, from 18% now. A separate group - looking into taxation of insurance products - has favoured exempting health insurance products for senior citizens and reducing tax to 5%, from 18% now, on products providing health cover up to Rs 5 lakh, sans any input tax credit. Auto stocks will be buzzing with report that automobile exports from India in the first six months of the current fiscal year rose 14 per cent year-on-year, led by gains in shipments of passenger vehicles and two-wheelers. According to Siam data, the overall exports in the April-September period stood at 25,28,248 units, up 14 per cent as compared with 22,11,457 units in the year-ago period. There will be some reaction in telecom stocks as the DoT's apex decision-making body Digital Communication Commission Member Manish Sinha said telecom sector revenue may cross Rs 5 trillion in the next two years in line with the present growth trend fuelled by ease of doing business measures introduced by the government in the last 2-3 years. Investors will react to recent earnings from major companies, including HDFC Bank, Kotak Mahindra Bank, Tata Consumer Products, and Tech Mahindra.

The US markets ended higher on Friday as markets were boosted by an earnings-driven jump in Netflix shares and broader gains across technology stocks. Asian markets are trading mixed on Monday as traders assessed China’s announcement of 1-year and 5-year lending rates.

Back home, Indian equity benchmarks bounced back after three days of fall and ended in green on Friday led by heavy buying in Banking, Metal and Basic Materials stocks and firm global market trends. The markets made a gap down opening and remained lower in early trade as traders were concerned as a report by the State Bank of India (SBI) stated that India's imported inflation reached a 13-month high in September 2024, growing by 2 per cent. Some concern also came as exchange data showed Foreign Institutional Investors (FIIs) offloaded equities worth Rs 7,421.40 crore on Thursday. However, key gauges erased all of their initial losses and entered in positive terrain in early afternoon deals, as strong recovery in select heavyweights, particularly from the banking sector, led to a swift rebound. Traders took encouragement with World Bank president Ajay Banga’s statement that India's growth rate is the shiniest part in the global economy. He noted that a lot of this is driven by the domestic market. Some optimism also came as direct tax collections have surged 182 per cent to over Rs 19.60 lakh crore in 2023-24 in the 10-year period of Prime Minister Narendra Modi-led government. The latest ‘Time Series Data’ released by the income tax department showed that the corporate tax collections more than doubled to over Rs 9.11 lakh crore in 10 years to 2023-24 fiscal. Personal income tax mop up grew close to four-fold to Rs 10.45 lakh crore during the period. Sentiments remained positive in late afternoon deals amid reports that much like the Centre, states are likely to continue down the path of fiscal consolidation with 21 states targeting to reduce the combined fiscal deficit to 3.2 percent in FY25 from 3.5 percent in the previous year. Meanwhile, Union Minister of State for Science and Technology (Independent Charge) Jitendra Singh has said that India will be transformed into a science and technology driven global biomanufacturing hub. The Union Minister also expressed need that the country should have a global vision about biochemical manufacturing and global strategies should be devised for this. Finally, the BSE Sensex rose 218.14 points or 0.27% to 81,224.75, and the CNX Nifty was up by 104.20 points or 0.42% to 24,854.05.