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Benchmarks likely to make cautious start

Indian markets started flat but gained momentum later and ended nearly a percent higher for the second straight session on Tuesday on buying in power and oil & gas stocks. Today, the markets are likely to get a cautious start amid weakness in other Asian markets despite overnight gains on Wall Street. The Reserve Bank of India’s three-day policy meeting, which is set to begin later today, will be on investor radar. Market participants do not expect the monetary policy committee to change its accommodative stance or the repo rate. There will be some cautiousness after the Bombay Chamber of Commerce and Industry's survey found that an overwhelming number of exporters are worried about competitiveness as global trade picks up pace after the ravages of the pandemic. Besides, foreign institutional investors (FIIs) offloaded shares worth Rs 1,915.08 crore, while domestic institutional investors (DIIs) lapped up shares worth Rs 1,868.23 crore on a net basis in the Indian stock market. Though, some support may come as Moody's Investors Service changed its outlook on India's sovereign ratings to stable from negative. However, it retained the ratings, both on foreign and domestic currencies, at the lowest investment grade. Experts said this would have a beneficial impact on debt allocations by foreign portfolio investors (FPIs) to Indian papers. There will be some buzz in the oil & gas industry stocks with a substantial increase in the offing in coming days as international oil prices touched seven-year high. Road logistic sector stocks will be in focus as ICRA Ratings said the outlook for the Indian road logistics sector continues to remain stable, supported by improved economic recovery in September quarter, increased pace of vaccination and decline in fresh COVID-19 cases from June onwards. There will be some reaction in coal industry stocks as the government said it has amended rules with a view to allow 50 per cent sale of coal from captive mines. The move is likely to benefit over 100 captive coal and lignite blocks with over 500 million tonnes per annum peak rated capacity as well as all coal and lignite bearing states. Real estate industry stocks will be in limelight with a private report that housing sales across Mumbai Metropolitan Region (MMR) during the January-August period have risen more than three times to Rs 1.33 lakh crore.

The US markets closed higher on Tuesday as Microsoft and Apple spearheaded a strong rebound in growth stocks. Asian markets are trading mixed on Wednesday following an overnight bounce on Wall Street.

Back home, Indian benchmark indices ended higher for the second consecutive session on Tuesday with Sensex rising as much as 400 points and Nifty 50 index moving above its important psychological level of 17,800 on the back of a broad-based buying interest. In the first half of the session, benchmarks fluctuated between gains and losses owing to weak global cues. Traders remain concerned with ICRA Ratings’ report stated that total infrastructure credit by banks and NBFC-Infrastructure Finance Companies (NBFC-IFCs) remained sluggish in the first quarter of the current fiscal (Q1FY22) due to the disruptions caused by the second wave of the COVID-19 pandemic. Some pessimism also came with a survey by a private firm showed India’s services sector activity eased sequentially in September as rising inflationary pressure worried producers regarding sustainability of high growth in coming months, even though loosening of pandemic restrictions supported an improvement in market conditions and overall demand. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index stood at 55.2 in September from 56.7 in August. However, markets staged a sharp recovery in second half of the session, as hopes of strong September quarter earnings, which will start with IT giant TCS and continuation of dovish monetary policy from the Reserve Bank of India lifted investors' sentiment. Traders also found support with Economic Affairs Secretary Ajay Seth’s statement that India is on the path of economic recovery supported by various government reforms in the last seven years under Prime Minister Narendra Modi's leadership. Notwithstanding the COVID-19 pandemic, he said, the government continued with the reform process and many strategic reforms were announced even during pandemic. Meanwhile, the government has extended the Credit Guarantee Scheme for Subordinate Debt (CGSSD) for stressed MSMEs till March 31, 2022. The scheme was approved by the government on June 1, 2020. It was launched on June 24 the same year to provide credit facility through lending institutions to the promoters of stressed MSMEs. Finally, the BSE Sensex rose 445.56 points or 0.75% to 59,744.88 and the CNX Nifty was up by 131.05 points or 0.74% to 17,822.30.

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