Markets likely to get flat-to-positive start following gains in global indices

Indian markets after making a positive start on healthy global cues, wipe out their gains and ended flat amid selling in financial shares. Today, markets are likely to get flat-to-positive start following gains in global indices. Sentiments will get boost as India Ratings and Research revised upward the country's GDP growth estimate for FY25 to 7.1 per cent from 6.5 per cent earlier. The projection is marginally higher than the Reserve Bank's estimate of 7 per cent. The rating agency said strong support from the sustained government capex, deleveraged balance sheets of corporate and banking sector, and the incipient private corporate capex cycle make it revise its estimate. Also, a private report said that India is on track to become the third largest consumer market in 2026, overtaking Germany and Japan, as people in the affluent category increase. However, foreign fund outflows likely to dent sentiments. Foreign Institutional Investors (FIIs) sold shares worth Rs 2,168.75 crore on May 6. Geopolitical tensions may also weigh on markets as Israel commenced its planned military offensive in Rafah hours after it rejected Hamas's proposal for a ceasefire in Gaza. There will be some buzz in sugar industry stocks as sugar industry body Isma has urged the government to allow 20 lakh tonnes of sugar exports in the current marketing year ending September as shipments of surplus sweetener would boost liquidity of millers enabling them to make cane payments to farmers on time. Construction equipment industry stocks will be in focus as the data released by the Indian Construction Equipment Manufacturers' Association (ICEMA) showed that India's construction equipment industry witnessed a 26 per cent rise in sales to 1,35,650 units in the 2023-24 fiscal on the back of the government's infrastructure-led growth agenda. The construction equipment (CE) industry had sold 1,07,779 units in the previous fiscal year. There will be some reaction in aviation industry stocks after credit ratings agency CRISIL said as much as half of the country's international air passenger traffic is expected to be catered by Indian airlines by financial year 2027-28. It said the share of Indian airlines in international passenger traffic, including originating or terminating as well as the traffic transitioning through the country, is seen surging 700 basis points to around 50 per cent by 2027-28, from 43 per cent in the previous fiscal. Railways stocks will be in limelight with a private report that Indian Railways in April rang up a tepid 1.45 per cent growth rate in its freight volumes, dragged down by weak numbers in coal transportation. It transported 128.29 million tonnes (mt) of goods, witnessing a fall of nearly 6 mt in its coal traffic.

The US markets ended higher on Monday driven by speculation of potential interest rate cuts by the Federal Reserve this year. Asian markets are trading mostly in green on Tuesday tracking overnight gains on Wall Street.

Back home, Indian equity benchmarks failed to hold on to their initial gains to end flat on Monday as traders turned worried amid growing uncertainty over the delay in rate cuts and persisting higher inflation. Key gauges started the day on an optimistic note after data from National Securities Depository (NSDL) showed that foreign portfolio investors (FPIs) have again returned as net buyers in the Indian stock market in May. Till May 3, they bought equities worth Rs 1,156 crore in India. In April, FPIs turned net sellers in Indian stocks, as the ongoing geopolitical crisis in the Middle East then likely pushed investors to take money off their portfolios. Traders also took note of report that growth in India's dominant services industry softened in April but remained sturdy on robust domestic and foreign demand, lifting business confidence to a three-month high. The HSBC final India Services Purchasing Managers' Index, compiled by S&P Global, fell to 60.8 in April from 61.2 in March, confounding a preliminary estimate for a rise to 61.7. Despite the decline in the headline reading, the figure still marked one of the fastest growth rates in just under 14 years. However, markets witnessed gradual selloff which led markets to end flat as market participants started booking profits at higher levels. PSU banks underperformed due to the Reserve Bank of India’s (RBI) tighter norms on lending to projects under development. The broader indices also witnessed major selling pressure due to valuation concerns and profit booking. Cautiousness also remained on Dalal Street as RBI said India’s forex reserves dropped $2.412 billion to $637.922 billion as on April 26, in the third consecutive weekly decline in the reserves. Meanwhile, India has urged the Asian Development Bank (ADB) not to overlook its focus on reduction of remaining poverty while promoting sustainable growth for the member nations in the Asia Pacific region. Making intervention at the Board of Governors Business Session at the 57th Annual Meeting of ADB, India's Temporary Alternate Governor Vikas Sheel said the bank has played a critical role in facilitating measures of faster economic development, reducing poverty and promoting regional cooperation while effectively addressing the challenges and delivery of global public goods. Finally, the BSE Sensex rose 17.39 points or 0.02% to 73,895.54 and the CNX Nifty was down by 33.15 points or 0.15% points to 22,442.70.