Markets likely to get positive start; Services PMI eyed

Indian markets ended lower on Friday as investors pared exposure to telecom, capital goods and tech stocks despite largely positive cues from Asian counterparts. Today, markets are likely to get positive start tracking Friday’s overnight gains on Wall Street. Investors will be eyeing the Services PMI data to be out later in the day. Some support will come as data from National Securities Depository (NSDL) showed that foreign portfolio investors (FPIs) have again returned as net buyers in the Indian stock market in May. Till May 3, they bought equities worth Rs 1,156 crore in India. In April, FPIs turned net sellers in Indian stocks, as the ongoing geopolitical crisis in the Middle East then likely pushed investors to take money off their portfolios. Traders may take note of report that Defence Minister Rajnath Singh in first clear remarks reflecting forward movement in the mega reform initiative said the theaterisation process in the military is making progress as consensus is emerging among the three services on the ambitious initiative. Singh said the talks between India and China are going on well for the resolution of the eastern Ladakh border row and hoped that a solution to the standoff will be found. However, there may some cautiousness as the Reserve Bank of India (RBI) said India’s forex reserves dropped $2.412 billion to $637.922 billion as on April 26, in the third consecutive weekly decline in the reserves. In the previous reporting week, the overall reserves had declined $2.28 billion to $640.33 billion. There will be some buzz in the telecom stocks as the Telecom Regulatory Authority of India (Trai) report showed that telecom subscriber base in the country grew marginally to 119.9 crore in March due to new additions by Reliance Jio and Bharti Airtel. As per the data, the broadband subscriber base rose to 92.4 crore. Banking stocks will be in focus as the Reserve Bank of India's weekly statistical supplement showed Indian banks' loans rose 19% in the two weeks to April 19 from a year earlier, while deposits rose 13.3%. As per the data, outstanding loans fell Rs 98,700 crore ($11.84 billion) to Rs 16,400,000 crore in the two weeks to April 19.

The US markets ended higher on Friday as a softer-than-expected employment report bolstered the case for rate cuts from the Federal Reserve while also providing evidence of U.S. economic resilience. Asian markets are trading mixed on Monday as traders await China's return from holiday, with mainland markets expected to rise due to supportive policies from Beijing. Meanwhile, markets in Japan and South Korea are closed.

Back home, Indian equity benchmarks ended sharply lower on Friday amid selling pressure in key index heavyweights namely – Larsen & Toubro, Maruti Suzuki and Nestle. Markets made a positive start as traders got support after the Organisation for Economic Co-operation and Development (OECD) raised its growth forecast for India by 40 basis points to 6.6 per cent for 2024-25, holding that buoyant public investment and improved business confidence are expected to propel India’s gross domestic product (GDP) growth. Some support also came with a private report that the stock market reflects India’s ascendance as an economic superpower with premium valuations, but challenges remain for inclusive growth. As per the report, over the past decade, India has steadily climbed the ranks of global economies, transitioning from the tenth to the fifth largest economy in the world. However, key gauges wiped out early gains and slipped into negative territory in morning deals, as traders turned cautious with provisional data from the NSE showing that foreign institutional investors (FIIs) net sold Rs 964.47 crore shares on May 2, 2024. Markets extended losses in afternoon deals, as sentiments remained down-beat with Reserve Bank data showing that India's services exports declined 1.3 per cent in March to $30 billion while imports fell by 2.1 per cent to $16.61 billion. As per RBI's data on India's international trade in services, the trade surplus during March 2024 was $13.4 billion. Meanwhile, economic think tank GTRI in its report said India's imports of electronics, telecom, and electrical products soared to $89.8 billion in 2023-24 and over half of these imports are sourced from China and Hong Kong. Finally, the BSE Sensex fell 732.96 points or 0.98% to 73,878.15 and the CNX Nifty was down by 172.35 points or 0.76% points to 22,475.85.