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Markets likely to open in green amid positive global cues

Indian markets closed higher for the first time in last five consecutive sessions, with minor gains on Monday. Today, benchmarks are likely to start the session on a positive note tracking gains across global markets. Some support will come as a private report stated that the economy is likely to register a 9.5 per cent growth this fiscal over 7.3 per cent contraction last year, as the ongoing recovery is faster and more credible than earlier foreseen. Traders may take note of Defence Minister Rajnath Singh's statement that India's defence exports have grown by 334 per cent in the last five years and the country is exporting to more than 75 countries. Singh said that India's export performance is a strong indicator of the quality and competitiveness of defence products. Meanwhile, batting for green hydrogen as a transport fuel, Union Minister Nitin Gadkari has said there is a need to make India a country that will not be dependent on imports of petrol and diesel. However, some cautiousness may come with report that Foreign Institutional Investors (FII) have been net sellers of domestic stocks for 5 consecutive days now. FIIs sold Rs 2,459 crore worth of equities on Monday. Domestic Institutional Investors, however, were net buyers of stocks worth Rs 2,390 crore. There will be some buzz in power stocks as a press release by CRISIL Ratings stated that solar tariffs might rise to Rs 2.6 per unit to Rs 2.7 per unit from an all-time low of Rs 2 unit over next fiscal year in the wake of the recent increase in the goods and services tax (GST) on renewable energy equipment, and the proposed customs duty on imported solar modules. Telecom stocks will be in focus as the government amended the telecom licence norms to reduce the tax burden on telecom operators by exempting all non-telecom revenues, income from dividends, interest, property sale and rent, among others, for calculation of levies like licence fees and spectrum usage charges. There will be some reaction in the hotel industry stocks as a report by the National Restaurant Association of India (NRAI) said the restaurant business worldwide was one of the hardest hit by the Covid-19 pandemic. The Indian food services market was no exception, as it witnessed 53 per cent degrowth in FY2021 compared to the previous fiscal. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended mostly higher on Monday buoyed by a robust start to the U.S. corporate earnings season and an improving economic outlook. Asian markets are trading mostly in green on Tuesday as corporate earnings and progress on President Joe Biden’s economic agenda helped sentiment even as the debate over inflation risks intensified.

Back home, snapping four day losing streak, Indian equity benchmarks ended the volatile day of trade in green terrain on Monday, as traders opted to buy beaten-down but fundamentally strong stocks. Markets started the session with weakness and extended losses in first half of the trade as traders remained anxious, as in its recent Regional Economic Outlook (REO), the IMF noted that the pandemic has taken a turn for the worse in Asia since the spring, along with the region’s growth outlook. The growth projection for the Asia and Pacific region is downgraded by more than 1 percent to 6.5 percent compared to the April 2021 forecasts--more than for any other region. Valuation concerns coupled with persistent selling by FIIs also kept traders on sidelines. Foreign portfolio investors (FPIs) have turned net sellers in Indian market by pulling out Rs 3,825 crore in October so far. However, local bourses staged smart recovery in second half of the trade as traders went for bargain hunting. Some support also came after industry chamber PHDCCI said it expects strong GDP growth in the coming quarters with the economic recovery gaining momentum. Out of the 12 lead economic and business indicators of QET (Quick Economic Trends), tracked by the industry body, nine have shown an uptick in the sequential growth for the month of September 2021 as compared to six showing the uptrend in August 2021. Traders also found some solace with India Ratings & Research’s report stating that the recently-concluded normal monsoon season will provide a much-needed cushion to both India's agriculture and inflation in 2021-22. Finally, the BSE Sensex rose 145.43 points or 0.24% to 60,967.05 and the CNX Nifty was up by 10.50 points or 0.06% to 18,125.40.

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