Markets likely to get flat-to-positive start tracking firm global cues

Indian markets ended higher on Monday amid buying across the sectors barring FMCG and Information Technology. Today, markets are likely to get flat-to-positive start tracking firm global cues. Traders will be taking encouragement as India Ratings said with falling trade deficit, India's current account deficit is likely to narrow to around $10 billion or 1 per cent of GDP in the April-June quarter of the ongoing fiscal. The country's current account deficit (CAD) stood at $18 billion or 2.1 per cent in the corresponding period of the previous fiscal. Some support will come as Union Minister for Labour and Employment Bhupender Yadav said more than 1.5 crore jobs have been created in nine organised sectors, including IT, manufacturing, trade and transport, during the nine-year rule of Narendra Modi government at the Centre. Traders may take note of India's G20 Sherpa Amitabh Kant stressed on the need to boost crop productivity through adoption of new cutting-edge technologies and said the farm sector should be made smart and adaptive to climate change. However, there may be some cautiousness with a private report that India is poised for its lowest monsoon rains in eight years, with the El Nino weather pattern seen crimping September precipitation after an August that is on track to be the driest in over a century. Banking stocks will be in focus with report that banking system liquidity has been gradually improving due to higher government spending. Market participants expect that it will improve further by the end of the current week. According to Reserve Bank of India (RBI) data, banks parked Rs 17,203 crore with the apex bank. There will be some reaction in real estate industry stocks with a private report that post-Covid, Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) in the real estate sector saw a major dip in 2022. Metal stocks will be in limelight with report that micro, small, and medium enterprises (MSMEs) in the steel sector are poised for rapid growth on the back of robust demand from the infrastructure and building and construction segments.

The US markets ended higher on Monday with gains in 3M and Goldman Sachs ahead of key inflation and jobs data this week that will offer more clues on the Federal Reserve's interest rate path. Asian markets are trading in green on Tuesday following overnight gains on Wall Street.

Back home, snapping a two-day losing streak, Indian equity benchmarks ended in green on Monday tracking strength in global markets and buying in Capital Goods, Industrials and Realty stocks. After making a positive start, key gauges turned cautious as the Department for Promotion of Industry and Internal Trade (DPIIT) in its latest data has said that foreign direct investment (FDI) equity inflows into India declined 34 per cent to $10.94 billion during April-June 2023-24, dragged by lower inflows in computer hardware and software, telecom, auto and pharma. However, markets soon gained some traction as traders found support with Finance Minister Nirmala Sitharaman’s statement that India's Gross domestic product (GDP) growth in the first quarter of this fiscal (Q1FY24) should be good and that the government's priority is to tame inflation, which has touched a 15-month high. She also said that green shoots of private capital expenditure upcycle can be palpably felt as the government's enhanced capital expenditure is now crowding in private sector investments. Sentiments remained positive in afternoon deals, taking support from the commerce ministry’s statement that Indian and UK officials will continue their negotiations till the month-end to iron out differences on the proposed free trade agreement (FTA). It said this meeting will be followed by a review at the higher level. Some support came as Prime Minister Narendra Modi stated that India has become face of Industry 4.0 revolution; future of global growth dependent on future of business. Some optimism also came amid reports that rise in high net-worth individuals and their need for diversification beyond traditional investment products contributed to a 15 per cent year-on-year gain in the asset base of portfolio management services to Rs 28.5 lakh crore at June-end. However, gains were limited as some cautiousness remained among traders after the Reserve Bank of India (RBI) in its latest data has said India's foreign exchange reserve fell by $7.3 billion to a near two-month low of $595 billion in the week ended August 18, registering the most substantial weekly decline in over six months. Finally, the BSE Sensex rose 110.09 points or 0.17% to 64,996.60 and the CNX Nifty was up by 40.25 points or 0.21% to 19,306.05.