Markets likely to get optimistic start tracking gains on Wall Street

Indian markets snapped a five-day losing streak and ended on a strong note on Monday, with the Nifty inching closer to 24,500, intraday, amid buying across sectors especially banking and metal stocks. Today, markets are likely to get an optimistic start tracking gains on Wall Street, amid strong Q2 results posted by a number of banks yesterday, coupled with receding tensions in West Asia. Tensions are easing in West Asia as reports suggest Israeli Prime Minister Benjamin Netanyahu said on Monday, he hopes to reach peace deals with more Arab countries once the war against Iranian proxies Hamas and Hezbollah is complete. Overnight fall in crude oil prices also likely to support domestic sentiments. Oil prices tumbled on Monday after Israel’s retaliatory strike against Iran at the weekend bypassed oil and nuclear facilities and did not disrupt energy supplies. Some support will come as the finance ministry in its monthly economic review for September said India's economic outlook remains bright, underpinned by a stable external sector, positive farm prospects and chances of higher government spending to make up for the shortfall during the general elections but ‘underlying demand conditions bear watching’. It also said India's inflation appears largely under control despite sporadic spikes in prices of certain vegetable. Besides, Prime Minister Narendra Modi and President Pedro Sanchez have underscored a mutual commitment to bolstering the India-EU Strategic Partnership. Central to this endeavor is the India-Middle East-Europe Economic Corridor Project (IMEEC), a significant focus for both leaders. Meanwhile, investors will closely watch the Q2 results of Adani Enterprises, Adani Ports, Cipla, Marico, Maruti Suzuki, and other companies, which will be released today. They will also react to the second quarter results released on Monday after market hours by Sun Pharma, Ambuja Cements, JSW Infra, Adani Power and others. In the primary market, Afcons Infrastructure's initial public offer (IPO) will close for subscription today. Additionally, shares of Danish Power, OBSC Perfection, and United Heat Transfer will list on NSE SME. As per a private report, Swiggy is seeking to sell shares for as much as Rs 390 ($4.64) each in an initial public offering that may raise $1.35 billion. The IPO will open for bids from November 6, and the shares are expected to start trading from November 13.

The US markets ended higher on Monday ahead of a packed week of earnings from megacap companies and the final stretch before the November 5 presidential election, while sentiment improved after energy supplies were not disrupted by weekend developments in the Middle East. Asian markets are trading mixed on Tuesday as traders prepared for the US election and key economic data that will set the stage for the next Federal Reserve decision.

Back home, Indian equity benchmarks exhibited a rebound after continuous selloff and ended with gains of over half percent on Monday, supported by robust performances from the banking sector, particularly ICICI Bank, which reported earnings that exceeded profit expectations for the September quarter. Markets made a positive start but soon turned cautious as traders were concerned amid foreign fund outflows. Foreign investors have continued selling in the Indian market, pulling out a massive Rs 85,790 crore (around $10.2 billion) from equities this month due to Chinese stimulus measures, attractive stock valuations, and the elevated pricing of domestic equities. October is turning into the worst-ever month in terms of foreign fund outflows. In March 2020, FPIs withdrew Rs 61,973 crore from equities. However, markets rebounded sharply in morning deals as traders took support with report stating that with the finance ministry seeking ‘justification’ for continuing the Interest Equalisation Scheme (IES) for exporters, the commerce department is exploring ways to revamp it to ensure the scheme meets the objectives outlined during its launch nine years ago. The scheme is currently set to expire on December 31. Markets extended gains in afternoon deals, as sentiments remained up-beat after a private report stated that there has been a cumulative 74.2 per cent decline in income disparity coverage for those earning up to Rs 5 lakh annually between fiscal years 2013-14 and 2022-23. Some optimism also came as the Reserve Bank of India (RBI) in its latest survey on ‘International Trade in Banking Services, 2023-24’ has showed that Indian banks increased their overseas presence during 2023-24 both in terms of balance sheet size as well as in terms of number of branches and employees. Besides, the income tax department has extended the deadline for filing income tax returns by corporates by 15 days till November 15 for assessment year 2024-25. However, towards the end, key indices erased some of their gains amid ongoing foreign selling and lackluster corporate quarterly earnings. Some concern also came as India’s foreign exchange reserves slumped for third straight week, after having scaled an all-time high early this month. Finally, the BSE Sensex rose 602.75 points or 0.76% to 80,005.04, and the CNX Nifty was up by 158.35 points or 0.65% to 24,339.15.