Domestic indices likely to get positive start tracking gains in overseas peers

Indian markets ended lower in the volatile session on Friday and snapped a five-day gaining streak with Nifty falling below 22,400. Today, domestic indices are likely to get positive start tracking gains in overseas peers. Sentiments will get boost as economic think-tank National Institute of Public Finance and Policy (NIPFP) said it has estimated India's GDP growth at 7.1 per cent for the current fiscal, using high-frequency models. NIPFP said the Centre is on a fiscal consolidation path through buoyancy in taxes and revenue expenditure compression. Some support will come as government data showed that India's crude oil imports in March fell by 1.1 per cent from a year earlier to 20.69 million metric tonnes. Data from the Petroleum Planning and Analysis Cell's (PPAC) website also showed imports of crude oil products dipped nearly 12 per cent to 3.83 million tonnes on a yearly basis, while product exports decreased 6.4 per cent to 5.66 million tonnes over the same period. However, there may be some cautiousness with report that foreign investors pulled out domestic equities worth Rs 6,300 crore in April, (till April 26) on concerns over tweaks in India's tax treaty with Mauritius and sustained rise in US bond yields. Data with the depositories showed this came following a whopping net investment of Rs 35,098 crore in March and Rs 1,539 crore in February. Foreign institutional investors (FIIs) net sold Rs 3,408.88 crore shares on April 26, provisional data from the NSE showed. Traders may be concentered as data from the central bank showed India's foreign exchange reserves fell for a second consecutive week and stood at a six-week low of $640.33 billion as of April 19. The reserves fell by $2.83 billion in the reporting week, adding to the previous week's $5.4 billion drop. Banking stocks will be in limelight as S&P Global Ratings said Indian banks' credit growth, profitability and asset quality would remain robust in current fiscal reflecting strong economic growth, but they may be compelled to slow down their loan growth as deposits are not growing at a similar pace. Infrastructure industry stocks will be in focus with report that as many as 448 infrastructure projects, each entailing an investment of Rs 150 crore or above, were hit by cost overrun of more than Rs 5.55 trillion during December quarter 2023. There will be some reaction in power industry stocks with a private report that India expects power generation to grow 9.3% to 1,900 billion kilowatt hours (kWh) during the fiscal year through March 2025. Market participants will continue to keep close eye on earnings reactions of many companies to be out later in the day.

The US markets ended higher on Friday buoyed by a rally in megacap growth stocks following robust quarterly results from technology heavyweights Alphabet and Microsoft in addition to moderate inflation data. Asian markets are trading mostly in green on Monday as traders look toward the Federal Reserve’s meeting this week, following another hotter-than-expected U.S. inflation reading Friday.

Back home, Indian equity benchmarks ended lower on Friday after five sessions of gains, primarily dragged down by Banking, TECK and Auto stocks. Market made a slightly positive start as traders took some support with the department of economic affairs in its monthly economic review for March stating that further easing of food prices is on the anvil as IMD has predicted above-normal rainfall during the monsoon season, which is likely to lead to higher production, assuming good spatial and temporal distribution of the rainfall. The report added that India's economic performance has remained robust despite global challenges and geopolitical concerns. However, markets failed to sustain early gains and soon slipped into red as traders turned cautious with provisional data from the NSE showing that foreign institutional investors (FIIs) net sold Rs 2,823.33 crore shares on April 25, 2024.  Traders overlooked United Nations Conference on Trade and Development’s (UNCTAD) report stating that India's services exports jumped 11.4 per cent to $345 billion in 2023 despite global economic uncertainties. Markets extended fall in late afternoon deals, as sentiments were downbeat with the World Bank’s statement that interest rates could remain higher than expected in 2024 and 2025 as global commodity prices level off. Some anxiety also came amid reports that India's central bank plans to soon change guidelines to permit banks to temporarily freeze accounts suspected of being used to commit cyber-crimes, as it battles a rising wave of online crime. Selling further crept in as rating agency Crisil said prices of vegetables, a key component of food inflation, may be elevated for the next few months due to ‘above-normal’ temperatures till June as predicted by the India Meteorological Department (IMD). The rates are likely to decline after the onset of monsoon in June. Finally, the BSE Sensex fell 609.28 points or 0.82% to 73,730.16 and the CNX Nifty was down by 150.40 points or 0.67% points to 22,419.95.