Domestic equity indices likely to start session in red

Indian markets ended the first trading session of the financial year 2025 on a buoyant note on Monday, with Sensex and Nifty garnering around half a percent gains led by metal stocks. Today, domestic equity indices are likely to start session in red amid mixed cues from global peers. Investors will be looking ahead to the manufacturing PMI data to be out later in the day for more directional cues. Foreign fund outflows likely to dent sentiments. Provisional data from the NSE showed that foreign institutional investors (FIIs) net sold shares worth Rs 522.30 crore on April 1. However, some respite may come later in the day with report that the centre collected Rs 1.78 lakh crore as gross goods and services tax in the month of March, up 11.5% against the same month last year. This is the second highest monthly gross GST collection. This surge was driven by a significant rise in GST collections from domestic transactions at 17.6%. Some support may come as rating agency ICRA said domestic consumption demand, government's infrastructure spending and healthy balance sheets lent support to India Inc's credit profile in the 2023-24 fiscal, even though rise in borrowing cost, sluggish exports and certain global events posed challenges. Also, Crisil Ratings said the credit quality outlook for Indian corporates remains positive for the April-September period of the 2024-25 fiscal year with upgrades continuing to outpace downgrades. Besides, the rural development ministry data showed that work generation under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) increased 4.81% to 3.1 billion person-days in 2023-24 from 2.96 billion in the previous financial year, though individual demand for work remained nearly the same at 332.7 million, as against 331.5 million in 2022-23. There will be some buzz defence industry stocks with report that steadily rising exports of defence and aerospace equipment touched a record Rs 21,083 crore (about $2.63 billion) in the financial year 2023-24 (FY24), a growth of 32.5 per cent over last year’s figure of Rs 15,920 crore. These figures indicate that the defence exports have grown by 31 times in the last decade. Auto stocks will be in focus with report that driven by robust demand for sports utility vehicles, passenger vehicle sales in India soared to a record high in FY 2023-24 with dispatch of over 42 lakh units. There will be some reaction in power industry stocks as the government data showed that India's power consumption growth remained subdued at 1.4 per cent to 129.89 billion units (BU) in March as compared to the year-ago period mainly due to pleasant weather. Meanwhile, India has initiated an anti-dumping probe into the import of a chemical used in the rubber industry from China and Japan following a complaint by a domestic player. 

The US markets ended mostly in red on Monday as hopes of an early rate cut suffered fresh jolt after data showed that the US manufacturing sector grew for the first time since September 2022. Asian markets are trading mostly higher on Tuesday despite mixed cues from Wall Street overnight.

Back home, extending the winning streak to a third straight session, Indian equity benchmarks ended first trading session of FY25 on a strong note on Monday, led by buying in Realty, Telecom and Metal stocks. The markets made a gap up opening and traded higher thereafter as traders took support with Finance Minister Nirmala Sitharaman’s statement that India's gross domestic product (GDP) is on track to grow by 8 percent or more in the quarter ended March 31. Some support also came as growth in output of the eight key infrastructure sectors - known as the core sector - rose to a three-month high of 6.7 per cent year-on-year (Y-o-Y) in February from 4.1 per cent in January. Additional support came in with a report that foreign investors made a strong return by injecting more than Rs 2 lakh crore into Indian equities in 2023-24, driven by optimism surrounding the country's robust economic fundamentals amidst a challenging global environment. A firm trade continued in markets in late afternoon deals, taking support from India's executive director at International Monetary Fund (IMF) Krishnamurthy Venkata Subramanian’s statement that Indian economy can grow at 8 per cent till 2047, if the country can redouble the good policies that it has implemented over the last 10 years and accelerate reforms. Some optimism also came with provisional data from the NSE showing that foreign institutional investors (FIIs) net bought shares worth Rs 188.31 crore on March 28. Traders also took support with domestic rating agency Care Ratings’ report that the gross non-performing assets (GNPAs) of the Indian banking system are set to improve further to up to 2.1 per cent by the end of FY25. It mentioned GNPAs are likely to come at 2.5-2.7 per cent in FY24 and will improve further to 2.1-2.4 per cent by the end of FY25. Finally, the BSE Sensex rose 363.20 points or 0.49% to 74,014.55 and the CNX Nifty was up by 135.10 points or 0.61% to 22,462.00.