Markets likely to get flat-to-negative start amid lacklustre global cues

Indian markets ended deeply in red on Tuesday and experienced their largest single-day drop in nearly three weeks, impacted by sluggish corporate earnings and persistent foreign selling. Today, markets are likely to get flat-to-negative start, following a lacklustre showing on Wall Street overnight. Overnight rise in crude oil prices likely to dent sentiments in the markets. Oil prices rose for the second consecutive session, as traders downplayed hopes of a Middle East ceasefire and focused on a tightening global supply and demand balance. Traders will be cautious as the International Monetary Fund (IMF) kept its growth forecasts for India unchanged at 7 per cent and 6.5 per cent for FY25 and FY26, respectively. It held that pent up demand accumulated during the pandemic has been exhausted as the economy “reconnects” with its potential growth. However, some support may come later in the day as Michael Debabrata Patra, deputy governor, Reserve Bank of India (RBI) said India is likely to recover to its long-term growth trend of 8 per cent. Patra said India’s GDP was projected to grow 7.2 per cent this financial year (FY25) and 7 per cent in FY26, with a strong likelihood of returning to the 8 per cent trend thereafter. Jewellery stocks will be in focus after the All India Gem and Jewellery Domestic Council (GJC) predicts a 30 percent surge in retail sales this festive season, despite anticipation of a slowdown in gold exports because of weak demand from the US. There will be some reaction in textile and garment industry stocks with report that India's cotton production in 2024/25 is likely to fall by 7.4 per cent from a year ago to 30.2 million bales because of lower area and as excessive rainfall damaged the crop. Lower production will reduce exports from the world's second biggest cotton producer in the current marketing year started on Oct. 1 and force the country to increase imports, supporting global prices. Meanwhile, investors will react to Q2 results from companies such as Zomato, Paytm, Adani Green, Bajaj Finance, Indus Towers, and M&M Financial Services.  Other major earnings reports expected include Hindustan Unilever, Bajaj Finserv, SBI Life Insurance, and several others. In the primary market, Waaree Energies IPO and Deepak Builders & Engineers India IPO will enter the last day of their subscription. Besides, Godavari Biorefineries IPO will open for subscription today.

The US markets mostly lower on Tuesday as investors kept an eye on Treasuries yields and awaited more earnings to assess the health of American companies. Asian markets are trading mixed on Wednesday reflecting subdued risk appetite as traders mulled the prospect of less aggressive Federal Reserve interest rate cuts.

Back home, extending losses to the second straight day, Indian equity benchmarks ended sharply lower on Tuesday due to a widespread sell-off driven by massive foreign fund outflows and sluggish global markets.  A weak earnings growth trend also hit investor sentiment. Markets made a slightly positive start as traders took support with the Reserve Bank of India's article on 'State of the Economy' published in the October Bulletin stating that India's growth outlook is supported by robust domestic engines and private investment showing some encouraging signs despite geopolitical tensions. Some support also came in 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. However, buying proved short-lived as markets soon slipped into red as traders turned cautious with exchange data showing that foreign institutional investors (FIIs) offloaded equities worth Rs 2,261.83 crore on October 21. Markets extended losses in late afternoon deals and settled near days low points as some cautiousness came with latest bulletin from the Reserve Bank of India stating that India's inflation is on a downward trajectory, but there is still significant ground to cover. The final stretch of disinflation hinges on controlling food inflation and mitigating its spillover effects on inflation expectations and core inflation. Traders took a note of private report stating that the Indian economy could grow between 7-7.2 per cent in the current fiscal on strong government spending, and higher manufacturing investments, but a tempered global growth will impact the outlook for the next fiscal. Invertors overlooked Finance Minister Nirmala Sitharaman’s statement that India is poised to continue its sustained growth trajectory and enhance its contribution to global growth significantly. She also noted that at the current rate, India is likely to be the world's third-largest economy by 2027. Finally, the BSE Sensex fell 930.55 points or 1.15% to 80,220.72, and the CNX Nifty was down by 309.00 points or 1.25% to 24,472.10.