Markets likely to get cautious start; CPI inflation data eyed

Indian markets ended lower on Friday tracking losses in global markets with financial, oil gas led the headline indices lower, while Power and FMCG shares ended in the green. Today, markets are likely to get cautious start amid grim global cues, following Silicon Valley Bank crisis. Investors may remain on sidelines ahead of Consumer Price Index (CPI) data to be out later in the day. Foreign fund outflows likely to dent domestic sentiments. Foreign institutional investors (FII) net sold shares worth Rs 2,061.47 crore on 10 March, according to the provisional data available on the NSE. However, some respite may come later in the day as the government data showed that India’s industrial production growth perked up slightly to 5.2 per cent in January from 4.7 per cent in December 2022, mainly due to good performance of the power, mining and manufacturing sectors. Sentiments may get a boost as the Central Board of Direct Taxes (CBDT) said net direct tax collection so far this fiscal grew 17 per cent to reach Rs 13.73 lakh crore, which is 83 per cent of the revised target for the full financial year. The growth in direct tax mop-up, which comprises personal income tax and corporate taxes, was driven by PIT collections. Some support may come as RBI Monetary Policy Committee (MPC) member Ashima Goyal said Inflation is expected to come down over the year, and asserted that the government's supply-side action coordinated with a flexible inflation-targeting regime has kept the rate of price rise lower than that in other countries. Traders may take note of the Reserve Bank of India’s statement that India’s foreign exchange reserves rose by $1.46 billion to $562.4 billion as of March 3, arresting the four successive weeks of fall. Besides, India and Australia have agreed to conclude the negotiations for a comprehensive free trade agreement as soon as possible as there is huge potential to enhance bilateral commerce in the next five years. There will be some buzz in the insurance industry stocks with report that the government may have to infuse more capital in the three public sector general insurance companies to improve their financial health. Banking stocks will be in focus as RBI showed that credit growth in the banking system has moderated further, growing at 15.5 per cent year-on-year (YoY) in the fortnight ended February 24, to Rs 134.50 trillion. There will be some reaction in chemical industry stocks with a private report that India is likely to account for more than a fifth of incremental global consumption for chemicals over the next two decades as domestic demand is projected to rise to $1,000 billion by 2040. Auto stocks will be in limelight as SIAM said that exports of two-wheelers, passenger vehicles and three-wheelers from India declined by 35 per cent in February mainly due to the weakening of currencies against the US dollar in destination countries, especially in the African continent.

The US markets ended lower on Friday after regulators sought to backstop all depositers in Silicon Valley Bank after customers withdrew over $42 billion worth of deposits. Asian markets are trading mixed on Monday tracking losses on Wall Street Friday overnight.

Back home, Indian equity benchmarks extended losses for second consecutive day on Friday in line with sell off in global markets. Markets opened with deep cuts and remained in negative territory for whole day as market participants remained on sidelines ahead of the industrial growth or Index of Industrial Production (IIP) data to be out later in the day. Traders also remained cautious with private report stating that retail inflation in India likely eased a bit last month but stayed above the Reserve Bank of India's upper threshold for a second straight month, keeping the central bank on course for further policy tightening. Some concern also came with the National Stock Exchange's provisional data showing that Foreign Institutional Investors (FIIs) emerged as net sellers in the capital market on Thursday as they sold shares worth Rs 561.78 crore. Sentiments remained dampened in late afternoon deals amid reports that stock investors wealth eroded by more than Rs 2.67 lakh crore in early trade on Friday, March 10, as the markets witnessed a sell-off amid weak global trends. Traders overlooked Union Minister for State for Commerce and Industry Anupriya Patel’s statement that India's merchandise and services exports combined in the current financial year ending March will be close to $760-770 billion. The country's merchandise and services exports stood at $672 billion in the last fiscal.  Traders also paid no heed towards Australian Prime Minister Anthony Albanese’s statement that the Economic Cooperation and Trade Agreement (ECTA) signed between India and Australia is a transformative agreement, which will unlock the next level of potential in trade and investment. Finally, the BSE Sensex fell 671.15 points or 1.12% to 59,135.13 and the CNX Nifty was down by 176.70 points or 1.00% to 17,412.90.