Markets likely to get a flat-to-positive start mirroring mixed trend in global markets

Indian markets ended lower on Tuesday due to continued profit booking as selling prevailed across the board amid disappointing Q4 earnings. Today, markets are likely to get a flat-to-positive start mirroring a mixed trend in global markets. Fall in crude oil prices likely to aid domestic sentiments. Oil steadied near its mid-March lows amid Middle East tensions and a slightly bearish US stockpiles report. However, foreign fund outflows likely to dent sentiments. FIIs sold shares worth Rs 3,668.84 crore on May 7. There will be some cautiousness as an industry wise analysis of the National Accounts Statistics 2024 data showed gross capital formation (GCF) - or investment - in manufacturing, construction, and mining sectors contracted in FY23 primarily due to a fall in export demand and low private consumption during the year. Traders may take note of ICRA’s report that incremental credit flow in the Indian economy from domestic sources is expected to moderate to Rs 24.5 trillion in the ongoing financial year. It was Rs 25.4 trillion in the previous financial year. However, the corporate bond issuances are expected to rise by 9.9 per cent. Stocks of Oil & Gas Industry likely to be in focus as data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed that India's fuel consumption, a proxy for oil demand, rose by 6.1% year-on-year to 19.858 million metric tons in April. There will be some reaction in FMCG industry stocks with a private report that the Indian FMCG industry experienced a 6.5 per cent growth in volume terms at a national level in the January-March period of 2024, with rural consumption surpassing urban for the first time in five quarters. Aviation industry stocks will be in limelight with a private report that the average daily domestic air traffic experienced a month-on-month increase of 1.6 per cent, reaching 442,783, fueled by sustained demand during the summer season. Meanwhile, investors will watch out for key results including Hero MotoCorp, L&T, TVS Motors, and Tata Power among others.

The US markets ended mostly in green on Tuesday as investors weighed potential Federal Reserve rate cuts. Asian markets are trading mixed on Wednesday after a slow US session. Some investors doubt if the recent rally can hold amid economic uncertainties.

Back home, Indian equity benchmarks ended over half a percent lower on Tuesday amid selling pressure across sectoral indices and in the broader markets despite firm cues from global markets. Markets made a slightly positive start but soon erased gains to trade lower amid foreign fund outflows. Foreign Institutional Investors (FIIs) sold shares worth Rs 2,168.75 crore on May 6. Also, geopolitical tensions weighted on markets as Israel commenced its planned military offensive in Rafah hours after it rejected Hamas's proposal for a ceasefire in Gaza. Key gauges extended losses in late morning deals as traders remained anxious with a private report stating that beyond geopolitical situations, the growing global concern surrounding environmental issues and clean energy pose certain threats to Indian companies planning to invest abroad. Sentiments remained dampened in afternoon deals, even as India Ratings and Research revised upward the country's GDP growth estimate for FY25 to 7.1 per cent from 6.5 per cent earlier. The projection is marginally higher than the Reserve Bank's estimate of 7 per cent. The rating agency said strong support from the sustained government capex, deleveraged balance sheets of corporate and banking sector, and the incipient private corporate capex cycle make it revise its estimate. Meanwhile, Finance Minister Nirmala Sitharaman said that the government has adopted ‘a pro-poor approach’ while implementing Goods and Services Tax, and despite lower taxes rates the revenues as a percentage of GDP have reached the pre-GST level. She said without GST, states' revenue from subsumed taxes from FY 2018-19 to 2023-24 would have been Rs 37.5 lakh crore. With GST, states' actual revenue amounted to Rs 46.56 lakh crore. Finally, the BSE Sensex fell 383.69 points or 0.52% to 73,511.85 and the CNX Nifty was down by 140.20 points or 0.62% points to 22,302.50.