Markets likely to make cautious start amid weak cues from global markets

Indian equity markets ended lower on Monday on account of hectic selling in Kotak Mahindra Bank, Bajaj Finserv, Indusind Bank and Ultratech Cement. Today, markets are likely to make cautious start amid weak cues from the global markets. Rising crude oil prices likely to weigh on the markets. Traders may be cautious as foreign institutional investors (FIIs) offloaded equities worth Rs 2,261.83 crore on October 21, according to exchange data. However, some respite may come later in the day as the money put in by Overseas Indians in non-resident Indian (NRI) deposit schemes doubled to $7.82 billion between April and August, 2024 from $3.74 billion put in these schemes during the same period in 2023. Traders may take note of report that the Reserve Bank of India’s (RBI’s) State of the Economy report for October acknowledged a slowdown in some high-frequency indicators but expressed confidence in a recovery, aided by consumption demand during the festival season. In India, aggregate demand is poised to shrug off the temporary slowdown in momentum in the second quarter of 2024-25 as festival demand picks up pace and consumer confidence improves. India’s growth outlook is supported by robust domestic drivers despite geopolitical tensions. There may be some buzz in real estate industry related stocks as private report said the Indian real estate sector received foreign institutional investments (FII) of $436 million during the third quarter of the calendar year 2024 (Q3 2024). The investments were 139 per cent higher compared to the corresponding period of the previous year but down by 80 per cent on a quarterly basis. Overall, the sector received institutional investments of $0.96 billion during the quarter, up 41 per cent year on year (Y-o-Y), but down by 69 per cent quarter on quarter (Q-o-Q). Hyundai Motor India is set to list today, debut may set the tone for other mega IPOs. 

The US markets ended mostly in red on Monday as Treasury yields rose and investors awaited new earnings reports. Asian markets are trading mostly in red in early deals on Tuesday trailing a weak session on Wall Street.

Back home, Indian equity benchmarks experienced volatility and ended marginally lower on Monday dragged by a decline in Oil & Gas, Industrials and Realty stocks. Markets made an optimistic start as traders took support with the retirement fund body, Employees' Provident Fund Organisation’s (EPFO) latest ‘Provisional payroll data’ report showing that 18.53 lakh net members have been added in the month of August 2024, a 9.07% year-on-year growth compared to August 2023, signifying increased employment opportunities and heightened awareness of employee benefits, bolstered by EPFO’s effective outreach initiatives. However, markets soon erased their gains and remained lackluster throughout the day, as traders turned cautious with data shared by the Reserve Bank of India (RBI) showing 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. Some anxiety also came 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. Sentiments remained lackluster in late afternoon deals, as a report by National Stock Exchange highlighted that the revenue disparity among Indian states continues to be significant, while some states have shown revenue growth in FY25 but others have reported a revenue contraction. Traders took a note of Reserve Bank Governor Shaktikanta Das’ statement that interest rate cut 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. He 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. Finally, the BSE Sensex fell 73.48 points or 0.09% to 81,151.27, and the CNX Nifty was down by 72.95 points or 0.29% to 24,781.10.