Markets likely to get flat to positive start amid optimistic macro-economic data

Indian markets after making positive start fell to hold the gains and ended lower on Monday amid selling across the sectors barring IT and pharma names. Today, markets are likely to get flat to positive start amid mixed cues from global markets. Positive macro-economic data likely to aid domestic sentiments. data released by the Ministry of Statistics and Programme Implementation showed that India's headline retail inflation rate decelerated to a three-month low of 5.10 percent in January due to easing food prices. Also, the Index of Industrial Production (IIP) growth for December 2023, meanwhile, was 3.8 per cent, compared to 2.4 per cent recorded in November. Foreign fund inflows likely to support domestic sentiments. Foreign institutional investors (FIIs) net bought shares worth Rs 126.60 crore on February 12, provisional data from the NSE showed. Besides, the Periodic Labour Force Survey (PLFS) data, released by the National Statistical Office showed that the jobless rate in urban India marginally declined further in Q3 (October-December) of FY24 to 6.5 per cent from 6.6 per cent in the preceding quarter, thus reflecting continued improvement in the labour markets. Traders may take note of report that the Reserve Bank of India (RBI) conducted two four-day variable rate repo (VRR) auctions to infuse liquidity into the banking system. The liquidity deficit in the system widened to Rs 1.93 trillion on Sunday. Meanwhile, Federation of Indian Chambers of Commerce & Industry's (Ficci) latest quarterly survey on manufacturing for Q4 FY24 projected future investment outlook as steady but industry respondents have flagged the availability of raw materials and their escalating prices, uncertainty in global demand, shortage of skilled labour, market volatility, increased power costs, unutilised capacities, and high bank interest rates, as some of the major constraints going forward. PSUs stocks will be in focus as MSCI added PSU stocks like - NMDC, BHEL, PNB and Union Bank to the MSCI India standard index under the February review. GMR Airports too added. There will be some reaction in edible oil industry stocks as the trade body Solvent Extractors’ Association of India (SEA) said the imports of edible oils - palm, soyabean, and sunflower in the first quarter of the 2023-24 oil year (October-September) declined by 23% to 3.64 million tonnes (mt) compared to the same period last year. 

The US markets ended mostly in red on Monday ahead of two US inflation reports this week that could influence Federal Reserve policy. Asian markets are trading mostly in green on Tuesday as more markets return to trade from the Lunar New Year holiday amid Japan’s corporate goods price index rose 0.2 percent in January.

Back home, Indian equity markets closed with losses of over half a percent on Monday, as investors remained on sidelines ahead to the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out later in the day for more directional cues. Markets made a slightly positive start but quickly shed the gains and slipped gradually lower as trade elsewhere in Asia remained muted with most markets closed on account of the Lunar New Year. Sentiments remained down-beat as India Ratings and Research (Ind-Ra) in its latest report stated that sustained disruptions in the Red Sea route is likely to raise the freight and forwarding (F&F) cost by 25-30 per cent for corporates largely dealing in international trade. Traders took a note of Piyush Goyal’s statement that India may not get the same amount of foreign direct investment (FDI) in the current financial year as compared to FY23, but I don’t see it as a material factor. Muted Q3 earnings by ONGC and Tata Power Company also dented investor sentiment. Traders overlooked Central Board of Direct Taxes’ (CBDT) statement that net direct tax collection so far in current fiscal grew 20 per cent year-on-year to Rs 15.60 lakh crore, which is 80 per cent of revised budget estimates for full fiscal year.  Traders also paid no heed towards the provisional data from the NSE showing that foreign institutional investors (FIIs) net bought shares worth Rs 141.95 crore on February 9. Finally, the BSE Sensex fell 523.00 points or 0.73% to 71,072.49 and the CNX Nifty was down by 166.45 points or 0.76% to 21,616.05.