Markets likely to make negative start on Wednesday

India equity markets ended in red on Tuesday on account of hectic selling in HDFC Bank, Kotak Mahindra, Wipro and Bharti Airtel. Today, markets are likely to make negative start on weak cues from the US markets overnight. Traders may be cautious as private report said the Red Sea crisis is expected to adversely impact trade volumes in a substantial way in 2024. It added that rising shipping, and insurance costs, delayed arrival of shipments will continue to disrupt global value chains, squeeze margins and make exports of many low margin products unviable from current locations. Countries like Asia, Africa and Europe will face the most disruption across industries. However, some respite may come later in the day as the Reserve Bank of India (RBI) said that India's current account deficit declined to $10.5 billion or 1.2 per cent of the GDP in October-December quarter from $11.4 billion in the previous three months and $16.8 billion a year back. Further, some support may also come in as Chief Economic Advisor (CEA) V Anantha Nageswaran said various initiatives from the government and growing investment are going to create more job opportunities during the decade. Talking about various government initiatives for job creation, Nageswaran said, skill development, provision of 12 per cent contribution of employers towards EPFO by the government, New Education Policy, and important structural reform in human development have been undertaken.

Asian markets are trading mixed in early deals on Wednesday following negative cues from the US markets overnight. The US markets ended lower on Tuesday after mixed economic reports and concerns about the economic impact of the indefinite suspension of vessel traffic into and out of the Port of Baltimore. 

Back home, snapping their three-days winning run, Indian equity benchmarks ended Tuesday’s trading session in the negative territory, amid selling seen in TECK, IT and Banking sectors. Markets made a weak start and traded in a negative zone throughout the day as traders were anxious with provisional data from the NSE showing that foreign institutional investors (FIIs) net sold shares worth Rs 3,309.76 crore on March 22. Some pessimism also came as the latest payroll data released by the Employee Provident Fund Organisation (EPFO) stated that the formal labour market in January experienced a slowdown as fewer fresh jobs were created during the month. In January 2024, the number of new monthly subscribers under the Employees’ Provident Fund (EPF) declined by nearly 4 per cent to 807,865 from 840,584 in December 2023. However, markets managed to trim some losses in afternoon deals, as traders took some support with report that S&P Global Ratings has raised India's Gross domestic product (GDP) growth forecast for the next financial year (FY25) to 6.8 per cent, but flagged restrictive interest rates as a dampener for economic growth. In November 2023, it had projected India's growth to be 6.4 per cent in FY25 on robust domestic momentum. It said the Indian economy is estimated to have clocked a growth of 7.6 per cent in the current fiscal (FY24). But, markets failed to hold recovery and ended sharply lower in late afternoon deals, as traders turned wary after Ministry of Finance has warned the ongoing crisis along the Red Sea shipping route poses a risk to 80 percent of India’s goods trade with Europe and could lead to higher inflation and lower growth in India due to rising transport costs.  Finally, the BSE Sensex fell 361.64 points or 0.50% to 72,470.30 and the CNX Nifty was down by 92.05 points or 0.42% to 22,004.70.