Markets likely to get cautious start amid mixed global cues

Indian markets ended in the red for the second consecutive session on Friday amid relentless foreign fund outflows and losses in blue-chip stocks Reliance Industries, ICICI Bank and State Bank of India. Today, markets are likely to get cautious start amid mixed global cues. Investors likely to remain on sidelines with October retail and wholesale inflation figures coupled with Index of Industrial Production (IIP) data to be out later in the week. Traders will be concerned with a private report that the continued spurt in food prices and fading of the high base effect likely led to a spike in October retail inflation figures. According to a report, retail inflation based on the Consumer Price Index is seen jumping to 6.15 per cent, breaching RBI’s 6 per cent tolerance band. Sustained foreign fund outflows likely to dent domestic sentiments, with FPIs pulling out nearly Rs 20,000 crore in the last five trading sessions on higher valuations of domestic stocks and shifting their allocation to China. Some cautiousness will come as to data shared by the Reserve Bank of India (RBI) showed that India's foreign exchange reserves dipped by $2.6 billion to $682.13 billion as of November 01. However, some respite may come later in the day as Moody’s Ratings said with Donald Trump set to become the next US president after the recently closely contested president polls, India and other Asian countries are expected to benefit due to rising US-China tensions and potential investment restrictions in strategic sectors. Some support may come as Union Commerce and Industry Minister Piyush Goyal said India's growth story will take the country's $3.5 trillion economy now to $35 trillion in the next 25 years. There will be some buzz in insurance industry stocks as Life Insurance Council report stated that the Indian life insurance sector recorded a robust year-on-year (YoY) growth in new business premiums (NBPs) for October 2024, with premiums increasing by 13.16 per cent compared to the same period last year. Coal industry stocks will be in focus as the government expressed optimism that it will achieve the production target of more than 170 million tonnes from captive and commercial coal blocks in the ongoing fiscal year. There will be some reaction in chemical industry stocks after the Basic Chemicals, Cosmetics and Dyes Export Promotion Council (CHEMEXCIL) Director General Raghuveer Kini said the export target of $31 billion for 2024-25 will be achieved, as there is a healthy demand for 'made in India' chemicals in countries like Brazil, the US, Japan and Saudi Arabia. Meanwhile, Britannia, BEML, Blue Dart, Hindalco, and MTPL are among the blue-chip companies that will release their Q2 numbers today.

The US markets ended higher on Friday as investors again cheered Donald Trump's decisive victory, although disappointment about China's latest fiscal support dampened the mood elsewhere. Asian markets are trading mostly lower on Monday after China reported lower-than-expected inflation for October, sparking concerns about the recovery of the world's second-largest economy.

Back home, Indian equity benchmarks continued their downward journey for the second consecutive session and ended marginally lower on Friday due to weak trends in blue-chip stocks like Asian Paints, Tata Steel and SBI. After making a slightly positive start, the frontline indices turned volatile as investor sentiment remained subdued, weighed down by persistent foreign institutional investor (FII) selling and underwhelming Q2 results. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,888.77 crore on Thursday, according to exchange data. In late morning deals, key gauges traded in red as traders remained cautious with S&P Global’s report stating that fight for deposits in an eventually declining rate cycle in India will add pressures on the net interest margins (NIM) for banks by 20 basis points. It said banks may see a further margin squeeze if credit and deposit growth remains steady. A lackluster trade continued in markets during late afternoon session amid a private report stating that a 21% increase in onion prices in just four days to a five-year high of more than Rs 60 per kg in several markets is likely to weigh on inflation data for November. Potato and cooking oil prices are also expected to stay higher this month. Separately, Niti Aayog CEO BVR Subrahmanyam has said that India should be a part of the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). India pulled out of the RCEP in 2019 after entering negotiations in 2013. The RCEP bloc comprises 10 ASEAN group members (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and their six FTA partners - China, Japan, South Korea, Australia and New Zealand. Finally, the BSE Sensex fell 55.47 points or 0.07% to 79,486.32, and the CNX Nifty was down by 51.15 points or 0.21% to 24,148.20.