Markets likely to extend previous session’s positive momentum with strong opening

Indian markets ended higher on Tuesday aided by buying interest in IT and auto stocks though selling pressure in FMCG counters played spoilsport and limited the upside. Today, markets are likely to extend their previous session’s positive momentum with strong opening tracking firm global cues. Traders are likely to keep close eye on the ongoing three-day deliberations of the Reserve Bank of India (RBI) Governor Shaktikanta Das-headed rate-setting panel, amid expectations of continued status quo on short-term lending rates as the retail inflation remains near the higher end of the central bank's comfort zone. For almost a year, the Reserve Bank has kept the short-term lending rate or repo rate stable at 6.5 per cent. Foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FIIs) net bought shares worth Rs 92.52 crore on February 6, provisional data from the NSE showed. Traders will be taking encouragement as finance minister Nirmala Sitharaman said that retail inflation has come down to within the tolerance band due to steps taken by the government to check price rise in essential commodities, especially in perishable commodities. Some support will also come as Commerce and Industry Minister Piyush Goyal said the government has taken various measures like production-linked incentive schemes and simplified policies to boost investments, trade and promote economic activities in the country. He added India continues to open its economy to global investors by raising FDI limits, removing regulatory barriers, developing infrastructure and improving the business environment. There will be some buzz in energy stocks as Prime Minister Narendra Modi said India will invest $67 billion in the gas sector over the next 5-6 years as part of an unprecedented amount of funds being put in to develop energy infrastructure. FMCG stocks will be in focus with a private report that India’s fast-moving consumer goods (FMCG) industry grew 6.4 per cent in volumes in the October-December quarter on the back of positive consumption across the country. The report added value growth in the industry stood at 6 per cent in the quarter. There will be some reaction in aviation industry stocks as the Ministry of Civil Aviation’s data showed that the average daily domestic air traffic fell by 4.98 per cent month-on-month (M-o-M) to 423,438 in January. On the other hand, the average daily international air traffic increased by 1.28 per cent M-o-M to 212,479 in January as foreign tourists continue to come amid the peak travel season that is expected to go on till March. Meanwhile, stock-specific action will continue as investors will react to Q3 numbers of Britannia, Nykaa, Nazara Tech and JK Tyre, among others.

The US markets ended in green on Tuesday as investors scrutinized a mixed bag of earnings at big U.S. companies and digested comments from Federal Reserve policy makers for clues about its first planned interest-rate cut. Asian markets are trading mostly higher on Wednesday as investors watched to see if Beijing's increasingly desperate attempts to prop up its collapsing share markets would actually work.

Back home, a heavy buying in IT and TECK stocks helped Indian equity markets to garner strong gains on Tuesday, with both Sensex and Nifty ending over half a percent higher. After a positive start, markets witnessed some volatility during early morning deals, amid mixed global cues and hawkish comments from Federal Reserve officials. Some cautiousness came with a private report stating that hiring activity saw a 5 per cent decline in January, while sequentially it was up 3 per cent. The sequential increase was largely due to an improvement in demand for skilled talent in the tourism, telecom, and Banking, Financial Services and Insurance (BFSI) industries. Traders took note of S&P Global Ratings’ statement that India’s sovereign rating support may strengthen over time if the next government - post general elections - could fund large infra projects without widening the country’s current account deficit and can shrink the fiscal deficit significantly. In late morning deals, key indices gained traction and maintained their gaining rally till the end of the trading session, as foreign fund inflows aided domestic sentiments. Foreign institutional investors (FIIs) net bought shares worth Rs 518.88 crore on February 5, provisional data from the NSE showed. Traders got encouragement after the Organization for Economic Co-operation and Development (OECD) raised India’s growth outlook for 2024-25 (FY25) to 6.2 per cent from the 6.1 per cent estimated earlier in its November outlook. Some support also came in, as according to data from the Central Depository Service and National Securities Depository, the number of demat accounts opened in January totalled over 46.84 lakh, compared to 40.94 lakh a month ago and 21.90 lakh a year ago. The total demat tally crossed 14.39 crore, up 3.4 percent from a month ago and 30.3 percent from a year ago. Finally, the BSE Sensex jumped 454.67 points or 0.63% to 72,186.09 and the CNX Nifty was up by 157.70 points or 0.72% to 21,929.40.