Markets likely to get cautious start amid weak global cues

Indian markets ended flat in a volatile trading session on Wednesday as investors turned cautious amid the ongoing Lok Sabha elections showcasing declining voter turnout. Today, markets are likely to get cautious start amid weakness in global markets. Foreign fund outflows likely to dent sentiments. Foreign Institutional Investors have net sold Rs 6,669.10 crore worth of Indian shares on May 08. There will be some cautiousness amid a private report that India's consumer price inflation is likely to have eased to 4.80% in April, just shy of March's rate as food inflation remains sticky. As per the report, with parts of the country experiencing a heatwave, food prices continue to pose an additional risk to India's inflation trajectory. However, some support may come as Chief Economic Adviser V Anantha Nageswaran said there was a high possibility of GDP growth touching 8 per cent in FY24 on the back of robust growth registered during the three quarters of the financial year ended March 2024. India’s gross domestic product (GDP) grew by 8.4 per cent in the third quarter ended December 2023. In the second quarter, the GDP growth was 7.6 per cent while 7.8 per cent in the first quarter. Meanwhile, Capital markets regulator Sebi has extended the settlement scheme period till June 10 for entities involved in reversal trades in the stock options segment on BSE in 2014 and 2015. The settlement scheme commenced on March 11 and was scheduled to conclude on May 10. Shares of NBFCs, mainly those involved in the business of Gold loans, may be in focus after the RBI directed these firms not to lend in cash of more than Rs 20,000 for gold loans, citing the Income Tax act. Sugar stocks will be in limelight amid a private report that India's government is not ready to take a decision about whether or not to allow sugar exports this year, and will need several months to assess the issue. Moreover, investors will await key earnings reports, including those of State Bank of India (SBI), Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL), and Asian Paints among others.

The US markets ended mostly in red on Wednesday as investors now awaiting Producer Price Index (PPI) and Consumer Price Index (CPI) for fresh update on the inflation trajectory as bets for a rate cut in September rose post last week’s jobs data. Asian markets are trading mostly lower on Thursday ahead of China's April trade figures and Japan's pay statistics.

Back home, Indian equity benchmarks exhibited a neutral performance with high volatility throughout the day and finally ended on a flat note due to lack of fresh positive triggers. Markets made negative start amid foreign fund outflows. According to exchange data, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,668.84 crore on May 7. Some cautiousness also came 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.  Besides, the Ministry of Statistics and Programme Implementation (MoSPI) it its National Account Statistics 2024 stated that net household savings declined sharply by Rs 9 lakh crore to Rs 14.16 lakh crore in three years to 2022-23. The net household savings peaked at Rs 23.29 lakh crore in 2020-21. These have been on the decline since then. However, markets erased initial losses and managed to keep their heads above water in afternoon deals, as traders took some support with Chief Economic Adviser in the Ministry of Rural Development Kuntal Sensarma’s statement that robust capital expenditure by the government and improvement in business confidence will push the country's economic growth in 2024-25. He said that the focus areas in 2024-25 should be infrastructure growth, inclusive development and harnessing demographic dividend, among others. Market participants also got support with government's chief economic adviser -- V. Anantha Nageswaran’s statement that India does not see any nasty upside to inflation at the moment, and expects its economy to expand by more than 7 per cent in the current fiscal year. However, markets failed to hold gains and ended flat as uncertainty around election outcome and subdued corporate earnings also kept investors on the sidelines. Finally, the BSE Sensex fell 45.46 points or 0.06% to 73,466.39, while the CNX Nifty remained unchanged at 22,302.50.