Markets managed to close volatile session on optimistic note on Monday, as both the larger peers, Sensex and Nifty logged the gains of 0.38% each. The markets started on the cautious note, amid weak macro-economic data. India's industrial production measured by Index of Industrial Production (IIP) slowed down to a three-month low of 4.3% in the month of August 2018, as compared to 6.6% in the previous month and 4.8% in the same of last year, while retail inflation based on Consumer Price Index (CPI) inched up to 3.77% in the month of September 2018, as compared to a 10-month low of 3.69% recorded in August 2018 and 3.28% in September 2018. Sentiments were pessimistic with SEBI's data report that capital garnered by Indian companies through issuance of shares to institutional investors dived by 78% to Rs 7,000 crore during the April-August period of the financial year 2018-19 as compared to Rs 31,153 crore raised during the corresponding period of the previous financial year. Traders also took a note of Reserve Bank of India's (RBI's) data report that the country's foreign exchange reserves declined by $915.8 million to $399.609 billion in the week to October 5 on account of a fall in foreign currency assets. The trade remained lackluster, after India's Wholesale price index (WPI) inflation also halted two-month easing trend in the month of September 2018, coming in line with rising retail inflation. As per the latest data released by the government, WPI surged to 5.13% in September from 4.53% in August and 3.14% during the corresponding month of the previous year. Adding some concerns, rating agency Moody's in its latest report said that Non-bank financial institutions (NBFI) will be significantly impacted if the liquidity distress in the country's capital markets, triggered by the default in September 2018 of IL&FS, prolongs for an extended period of time. However, in the last leg of the trade, the key indices erased all of their losses to settle the day in green terrain, supported by SBI Ecowrap report that the RBI is not expected to hike key lending rates in the current fiscal. The market participants got relief with credit rating agency Crisil Research's report expecting the corporate revenue growth to grow by around 12% for the quarter ended September 30, 2018. This would mark the fourth consecutive quarter of double-digit growth. Finally, the BSE Sensex surged 131.52 points or 0.38% to 34,865.10, while the CNX Nifty was up by 40.00 points or 0.38% to 10,512.50.

The US markets ended a choppy trading session on negative note on Monday as an increase in tensions between Western powers and Saudi Arabia added to worries over rising borrowing costs and the impact of tariffs. Geopolitical tensions were another worry for investors, starting with Saudi Arabia, which is locked in a diplomatic spat with the US. On Sunday, President Donald Trump threatened severe punishment for the Saudis if any connection was found between the kingdom and a missing dissident journalist. That country responded with an immediate threat to retaliate, sparking a rally for oil prices. Investors also remained cautious after the Commerce Department released a report showing much weaker than expected US retail sales growth in the month of September. The Commerce Department said retail sales inched up by 0.1 percent in September, matching the uptick seen in August. Excluding a rebound in auto sales, retail sales edged down by 0.1 percent in September after rising by a downwardly revised 0.2 percent in August. Ex-auto sales had been expected to rise by 0.3 percent, matching the increase originally reported for the previous month. A separate report released by the Federal Reserve Bank of New York showed the pace of growth in New York manufacturing activity accelerated by more than anticipated in the month of October. The New York Fed said its general business conditions index rose to 21.1 in October from 19.0 in September, with a positive reading indicating growth in regional manufacturing activity. Dow Jones Industrial Average declined 89.44 points or 0.35 percent to 25,250.55, Nasdaq slipped 66.15 points or 0.88 percent to 7,430.74 and S&P 500 was down by 16.34 points or 0.59 percent to 2,750.79.

Crude oil futures ended higher for second straight session on Monday amid speculation about a likely drop in demand due to the impact of the US-China trade dispute on global economic growth. President Donald Trump threatened severe punishment if an investigation finds the kingdom in any way involved in the disappearance of dissident Saudi journalist Jamal Khashoggi, who was last seen entering the Saudi consulate in Istanbul on October 2. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) lowered its global oil demand growth forecast for demand this year and next, as it showed rising OPEC and Russian production. Benchmark crude oil futures for November gained 44 cents or 0.6 percent to settle at $71.78 a barrel on the New York Mercantile Exchange. December Brent crude was up by 35 cents or 0.4 percent to settle at $80.78 a barrel on London's Intercontinental Exchanged.

Breaking its three-day winning streak, Indian rupee ended weaker against the American currency on Monday, tracking losses in Asian currencies as crude oil prices increased. The forex market sentiments were also impacted by the Central Statistics Office's (CSO) data showed that India's retail inflation rate slightly rose to 3.77% in September as compared to 3.69% in August, driven by higher food, fuel prices and a depreciating rupee. On the other hand, the country's industrial output eased in August with a slower rise of 4.3% as compared to 6.52% in July. Market-men also remain concerned with data showing that inflation based on wholesale prices rose to a two-month high of 5.13 per cent in September, mainly due to hardening of food prices and rise in cost of petrol and diesel. Besides, weak dollar against some currencies overseas also failed to cast any impact on the rupee. On the global front, yen hit a one-month high on Monday as rising geopolitical tension and investor anxiety about the global economy left investors skittish at the start of the week. Finally, the rupee ended at 73.83, 26 paise weaker from its previous close of 73.57 on Friday.

The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4982.32 crore against gross selling of Rs 6090.37 crore, while in the debt segment, the gross purchase was of Rs 111.80 crore with gross sales of Rs 1667.52 crore. Besides, in the hybrid segment, there was no gross buying and selling.

The US markets ended lower on Monday as tech companies continued to slide. Besides, US- Saudi trade tension weighed down on investors' sentiments. Asian markets were trading in green on Tuesday as moves in Treasury yields remained muted for a second session. Indian markets ended higher for second straight session on Monday on the back of value buying in bluechip stocks in the last leg of trade, despite disappointing macro-economic data and uninterrupted foreign fund outflows. Today, the markets are likely to make positive start amid firm Asian cues. Investors shifted their focus to September quarter earnings from global trade and geopolitical tensions. Traders will be getting some encouragement with report that India's trade deficit declined to a five-month low in September even as exports contracted, providing some respite from the rising gap that has sparked concern about the current account deficit (CAD). Trade deficit declined to $13.98 billion in September from $17.39 billion in August following slower growth in imports. Besides, exports were pegged at $27.95 billion in September, down 2.15% from a year ago, while imports rose 10.45% to $41.9 billion, lowest in five months. However, there may be some cautiousness with markets regulator Securities and Exchange Board of India's (SEBI) data showing that listed Indian companies raised over Rs 2 lakh crore in April-September this fiscal through private placement of corporate bonds, registering a sharp decline of 38% from the year-ago level. As per the data, in the entire 2017-18 fiscal, the capital raked in through the route stood at Rs 6 lakh crore. There will be some buzz in non-bank financial companies (NBFCs) stocks with Moody's Investors Service's statement that Indian NBFCs will be significantly impacted if the liquidity distress in the country's capital markets, triggered by the default in September 2018 of IL&FS, prolongs for an extended period of time. There will be some important earnings announcements too to keep the markets buzzing.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Dr. Reddy's Laboratories has entered into a definitive agreement for the sale of its API manufacturing business unit located in Jeedimetla in Hyderabad, to Therapiva.
• L&T's Heavy Engineering arm has secured additional orders worth Rs 1,050 crore in Q2 FY19 against stiff global competition. 
• Sun Pharmaceutical Industries is going to invest an additional Rs 200 crore at its Assam plant to augment operations. 
• IndusInd Bank has reported 4.56% rise in its net profit at Rs 920.25 crore for Q2FY19 as compared to Rs 880.10 crore for Q2FY18.