Markets likely to witness selling pressure with gap-down opening

Indian markets snapped the three-day gaining run and ended in red on Tuesday due to profit-taking in select private bank and auto shares amid weak trends from the US markets and foreign fund outflows. Today, markets are likely to witness selling pressure with gap-down opening tracking weakness in global markets, after data showing strong labour demand raised fears of a delayed rate cut by the Fed. The US 10-year bond yield rose to 4.40 per cent. Investors also likely to remain cautious as the RBI appointed MPC (Monetary Policy Committee) begin their 3-day meet to discuss policy measures. The RBI will announce the outcome on Friday. There are expectations that MPC may keep the repo rate unchanged. Foreign fund outflows likely to dent sentiments. Foreign institutional investors (FII) sold shares net worth Rs 1,622.69 crore on April 03, 2024, according to the provisional data available on the NSE. However, some respite may come later in the day as revising its earlier projections for the same period by 1.2 per cent, the World Bank said the Indian economy is projected to grow at 7.5 per cent in 2024. Some support may come as the government has broadly met the tax collection target of over Rs 34.37 trillion for 2023-24 on the back of robust economic activity and improved compliance. The government had raised the target for direct tax collection in FY24 (April 2023 to March 2024) to Rs 19.45 trillion, while for indirect taxes (GST+ Customs + Excise) the target was lowered to Rs 14.84 trillion in the revised estimates (RE) presented in Parliament on February 1, 2024. Sugar industry stocks will be in focus after Indian Sugar Mills Association (ISMA) has requested the government to allow the export of 10 lakh tonne of sugar in the current 2023-24 season, anticipating healthy closing stock by the season-end. Sugar production has reached 302.20 lakh tonne till March of the current season against 300.77 lakh tonne in the year-ago period. There will be some reaction in edible oil industry stocks with a private report that India's sunflower oil imports rose by 51% in March from the previous month to reach the second highest level on record, as lower prices led refiners to increase their purchases, while reducing buying of rival palm oil. Aviation industry stocks will be in limelight as aviation consultancy firm CAPA India's data showed that the domestic and international air traffic in India for the first time crossed the pre-pandemic peak of 2018-19 in 2023-24 due to sustained increase in demand. International air traffic in India saw faster growth than domestic air traffic in 2023-24. Meanwhile, SRM Contractors will list its equity shares on the bourses on April 3. The final issue price has been fixed at Rs 210 per share. The stock will be in trade-for-trade segment for 10 trading days.

The US markets ended lower on Tuesday as investors weighed chances that the Federal Reserve could delay cutting interest rates, while Tesla shares dropped after the electric car maker posted fewer quarterly deliveries for the first time in nearly four years. Asian markets are trading in red on Wednesday with markets watching for moves in electric vehicle makers.

Back home, Indian equity benchmarks snapped a three-day winning streak to close marginally lower on Tuesday due to losses in TECK, IT and Telecom stocks. After a weak start, the markets recovered but remained in negative territory for most part of the session as cautiousness prevailed ahead of the RBI monetary policy decision and the start of Q4 earnings season. Traders also remained cautious with provisional data from the NSE showing that foreign institutional investors (FIIs) net sold shares worth Rs 522.30 crore on April 1. Adding to the pessimism, a report by the United Nations Conference on Trade and Development (UNCTAD) showed that India’s dependence for trade on the European Union (EU) and China is rising as global trade has seen a restructuring along the geopolitical lines in the past two years. Traders overlooked a private survey showing that the manufacturing sector in India closed out FY24 with a stellar performance in March, as companies stepped up hiring in response to strong production and new orders. The HSBC India Manufacturing PMI rose to a 16-year high of 59.1 in March, from 56.9 in February. While this number was the highest since February 2008, it was lower than HSBC's preliminary estimate of 59.2. A reading of over 50 separates expansion from contraction. Traders also paid no heed towards 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%.  However, markets managed to trim some losses in final hour of trade following gains in global markets. Finally, the BSE Sensex fell 110.64 points or 0.15% to 73,903.91 and the CNX Nifty was down by 8.70 points or 0.04% to 22,453.30.