Markets likely to get negative start on Monday

Indian markets ended lower on Friday as uncertainty over the timing in Fed rate cut resurfaced following hotter-than-expected wholesale inflation data in the US. Today, markets are likely to get negative start as key central bank decisions from the US, Japan and Australia, among others, remain on investor radar this week. There may be some cautiousness as former chief economic adviser Arvind Subramanian said India's latest GDP numbers are 'absolutely mystifying' and difficult to comprehend. India's economy grew by better-than-expected 8.4 per cent in the final three months of 2023 - the fastest pace in one-and-half years. India's economy grew by better-than-expected 8.4 per cent in the final three months of 2023 - the fastest pace in one-and-half years. However, foreign fund inflows likely to aid sentiments. Foreign institutional investors (FIIs) net bought shares worth Rs 848.56 crore on March 15, provisional data from the NSE showed. Some support may come as latest data by the Reserve Bank of India (RBI) showed that India's foreign exchange reserves jumped by $10.47 billion to $636.1 billion for the week ending on March 8. This is the biggest surge since the week ended July 14, 2023. Traders may take note of report that India recorded the highest monthly exports during the fiscal in February, registering an 11.9 per cent growth to $41.4 billion, mainly driven by increased shipments of engineering goods, electronic items and pharma products. The trade deficit during February worked out to $18.7 billion, up from $16.57 billion in the year-ago month, as gold imports surged significantly. Merchandise imports were valued at $60.11 billion, up 12.16 per cent compared to $53.58 per cent in February 2023. Stocks related to electrical two-wheelers will be in focus as credit rating agency ICRA expects the initial cost of an electric two-wheeler (e-2W) to increase by 10 per cent due to the reduced subsidy. This would make e-2Ws 70 per cent more expensive than petrol scooters upfront. Despite this setback, ICRA predicts e-2W penetration to reach 6-8 per cent of the overall industry by FY2025, driven by factors like lower operating costs for electric vehicles and continued government support for the EV sector. There will be some reaction oil & gas industry stocks with report that the government raised windfall tax on petroleum crude to Rs 4,900 a tonne from Rs 4,600. The new rates will be affective from March 16. The tax is levied in the form of a Special Additional Excise Duty (SAED). Edible oil industry stocks will be limelight as Solvent Extraction of India (SEA) data showed that oilmeals export rose 9 per cent year-on-year in February to nearly 5.16 lakh tonnes on higher outward shipments of soyabean meal. It said the export of oilmeals in February stood at 515,704 tonne as compared to 4,71,770 tonne in the year-ago period.

The US markets ended lower on Friday led by technology-related megacaps that have propelled this year's rally, while investors weighed the interest rate outlook ahead of next week's Federal Reserve meeting. Asian markets are trading mostly in green on Monday as China is scheduled to unveil a range of economic indicators, such as February's retail sales, industrial output, and urban unemployment figures.

Back home, Indian equity benchmarks reversed yesterday’s gains and slipped over half a per cent on Friday dragged by Oil & Gas, Energy and PSU stocks. Markets made a negative start and extended their losses as the trading session progressed, as traders got anxious with provisional data from the NSE showing that foreign institutional investors (FIIs) net sold shares worth Rs 1,356.29 crore on March 14, 2024. Traders remained cautious with report by global rating agency Moody’s asserting that the large number scheduled elections in various countries in 2024 increases risks of shifts in policy and policy effectiveness. It argued while elections rarely immediately affect sovereign credit ratings, they can result in credit positive or negative developments - like changes in the policymaking process and legislative composition - which according to it ultimately alter a sovereign’s economic and fiscal trajectories. Markets continued to show a sluggish trend in afternoon session after commerce ministry stated that India's merchandise trade deficit widened to $18.71 billion in February from $17.49 billion in January. The trade deficit stood at $16.57 billion in February 2023. While the trade deficit widened in February, exports rose by 11.9 percent to $41.40 billion, while imports increased by 12.2 percent on a year-on basis to $60.11 billion. However, markets managed to trim some losses in late afternoon deals, taking support from the Confederation of Indian Industry’s (CII) report that new unicorns are likely to add $1 trillion to the Indian economy, which would reach $7 trillion size by 2030, and add 50 million new jobs. Startup firms valued over $1 billion are categorised as unicorns. Meanwhile, the US embassy has said that in this first trilateral technology meeting, the United States, Republic of Korea, and India discussed opportunities to cooperate on semiconductor supply chains, telecommunications and digital public infrastructure, artificial intelligence, quantum, space, advanced materials, clean energy and critical minerals. Finally, the BSE Sensex fell 453.85 points or 0.62% to 72,643.43 and the CNX Nifty was down by 123.30 points or 0.56% to 22,023.35.