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Indian markets recovered most of their initial losses and ended flat with negative bias on Thursday amid persistent foreign outflows. Today, markets are likely to get flat-to-negative start amid lackluster cues from global markets. Traders will be concerned as rating agency CRISIL said the revenue growth of Indian companies for the July-September quarter is estimated to be 5-7 per cent year-on-year (Y-o-Y), marking the slowest growth in 16 quarters. The slowdown was attributed to the stagnant performance in the construction sector, which accounts for 20 per cent of the total India Inc’s revenue. The agency also cited a decline in the industrial commodities sector and subdued growth in investment-linked sectors as contributing factors. There will be some cautiousness after Union Finance Minister Nirmala Sitharaman has stressed that job creation is the most critical issue worldwide, particularly given the persistent economic challenges and rapid technological advancements that are reshaping the labor market. Banking stocks will be in focus as rating agency ICRA said the slew of regulatory actions, including a ban on fresh lending by some regulated entities and tighter funding conditions, may lead to a steady slowdown in the credit growth of banks and non-bank financial companies (NBFCs). Incremental bank credit growth is expected to slow down to Rs 19.0-20.5 trillion in FY25 (12 per cent year-on-year (Y-o-Y) growth), compared to Rs 22.3 trillion in FY24 (Y-o-Y growth of 16.3 per cent). Oil stocks will be in limelight as S&P Global Commodity Insights said India’s demand for oil and refined oil products is expected to grow by almost 4% in the fourth quarter of the current calendar year compared to the corresponding period of last year. Investors will be eyeing earnings from many companies including YES Bank, IDFC First Bank, ICICI Bank, REC, JK Cement, Titagarh Rail Systems, Godawari Power & Ispat, Meghmani Organics, for more directional cues.

The US markets ended higher on Thursday snapping three straight sessions of losses, while US Treasury yields and strong corporate results allayed worries over upcoming US elections and interest rate cuts. Asian markets are trading mostly in green on Friday with investors awaiting Japan’s general election over the weekend.

Back home, Indian equity benchmarks ended flat with a negative bias on Thursday, as unabated foreign fund outflows and disappointing Q2 earnings dented investor sentiment. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,684.63 crore on Wednesday, according to exchange data. After making a cautious start, key gauges slipped into red as traders got cautious with Member of Economic Advisory Council to the Prime Minister (EAC-PM) Sanjeev Sanyal’s statement that artificial intelligence (AI) will both create and destroy jobs and a lot depends on how it is adopted. He claimed AI will impact highly skilled people and functions will be disintermediated. However, markets soon erased some of their initial losses but remained muted throughout the session as some pessimism remained among traders with Finance Minister Nirmala Sitharaman stating that India will impose restrictions on foreign direct investment (FDI) in the national interest to ensure safeguards due to its location in a highly sensitive neighbourhood. However, losses were limited as traders took support with minutes of the Reserve Bank of India (RBI) monetary policy committee's latest meeting stating that India's food inflation expected to ease by Q4 of fiscal year 2024-25 on better kharif arrivals and rising prospects of a good rabi season, despite a significant pick-up in September inflation print. Some support also came with the survey showing that growth in India's business activity picked up slightly in October after softening last month, led by stronger demand in the manufacturing sector. It also showed job creation rose at the fastest pace since February 2006. HSBC's flash India Composite Purchasing Managers' Index, compiled by S&P Global, rose to 58.6 this month from September's final reading of 58.3, which was a 10-month low. Finally, the BSE Sensex fell 16.82 points or 0.02% to 80,065.16, and the CNX Nifty was down by 36.10 points or 0.15% to 24,399.40.

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