Markets likely to make cautious start on weak cues from US markets

Indian equity markets ended lower on Monday ahead of key macroeconomic data i.e. inflation and industrial growth data, which are going to be out on November 12. Today, markets are likely to make cautious start on weak cues from US markets overnights. Rising crude oil prices likely to weigh market sentiments. Oil prices rose on increased geopolitical risk after the fall of Syrian President Bashar al-Assad, and as top importer China flagged its first move towards a loosened monetary policy stance since 2010. However, some respite may come later in the day as the labour ministry said retail inflation for farm workers and rural labourers eased to 5.96 per cent and 6 per cent, respectively, in October from 6.36 per cent and 6.39 per cent in September. Meanwhile, a private report said India retail inflation likely fell to 5.53% in November after breaching the central bank’s 6% upper tolerance band as the arrival of fresh produce to markets moderated soaring vegetable prices. Traders may take note of report that Union Minister of State Kirti Vardhan Singh said that the Digital India initiative has laid the foundation for a developed India by 2047. He said over the past 11 years, the government has brought about a digital revolution, inspiring citizens to work digitally, which has had an unprecedented impact on 1.4 billion people.  There may be some buzz in entertainment and media industry related stocks as a private report said that India’s entertainment and media industry is projected to grow at a combined annual growth rate (CAGR) of 8.3 per cent to hit Rs 365,000 Crore (USD 19.2 billion) outpacing the global rate of 4.6 per cent. Additionally,  the central government appointed Sanjay Malhotra as the next governor of the Reserve Bank of India (RBI). Malhotra, who currently serves as the Secretary in the Department of Revenue, will replace Shaktikanta Das at the central bank.

The US markets ended lower on Monday, driven by a drop in AI leader Nvidia that weighed on tech stocks, as investors looked ahead to a crucial inflation report set for later this week. Asian markets are trading mostly in green in early deals on Tuesday as China’s stimulus pledged boosts sentiment. 

Back home, Indian equity benchmarks ended lower for the second consecutive session on Monday dragged down by selling in blue-chip stocks Hindustan Unilever, Tata Motors and Axis Bank and mixed global trend.  Markets made a negative start and mostly languished in negative territory during the day as traders remained on sidelines ahead of this week's IIP and inflation numbers, which would be key given the RBI's reluctance to cut rates on the back of higher inflation concerns going ahead. Some cautiousness came as industry body CII has suggested the government to stick to the fiscal deficit target of 4.9 per cent of GDP for 2024-25 and 4.5 per cent for 2025-26, cautioning that overly aggressive targets beyond these could adversely affect India's economic growth. Fresh foreign fund outflows also dented market sentiment. Foreign Institutional Investors (FIIs) turned sellers on Friday after unabated buying for the past many days. They sold equities worth Rs 1,830.31 crore, according to exchange data. Adding some pessimism, a private report stated that the political turmoil in Bangladesh has slowed down exports of gem and jewellery, imitation jewellery, engineering goods and oilmeals from India. The raw cotton, cotton yarn and textiles exporters are facing delays in payments, even though the buyers are depositing payments in local currency Bangladeshi Taka. However, due to dollar shortage, banks are finding it difficult to convert Taka into dollars, resulting in payment delays. However, losses were limited as traders took support with data from the Department for Promotion of Industry and Internal Trade (DPIIT) showing that foreign direct investment (FDI) inflows into India have crossed the $1 trillion milestone in the April 2000-September 2024 period, firmly establishing the country's reputation as a safe and key investment destination globally. The cumulative amount of FDI, including equity, reinvested earnings and other capital, stood at $1,033.40 billion during the said period. Some support also came as Union Education Minister Dharmendra Pradhan asserted that India will become a $30 trillion-economy by 2047. Pradhan said that India, the fastest-growing global economy, is currently in the fifth position and will bag the third spot in the next three years. Traders took note of report that Information and Broadcasting Minister Ashwini Vaishnaw has said that India will continue to grow at 6-8 per cent for the next five years due to the transformative changes ushered in by Prime Minister Narendra Modi in the face of global turmoil and geopolitical tensions. He said India's growth story was based on four pillars of massive public investments, focus on manufacturing and innovation, inclusive growth and simplification of laws. Finally, the BSE Sensex fell 200.66 points or 0.25% to 81,508.46, and the CNX Nifty was down by 58.80 points or 0.24% to 24,619.00.