Markets to get cautious start amid mixed global cues, ahead of India’s retail inflation

Indian markets ended higher on Friday, propelled by a rally in market heavyweights Reliance Industries, ITC and Bharti Airtel amid a supportive trend overseas. Today, markets are likely to get cautious start amid mixed global cues and ahead of India’s retail inflation data to be out later in the day. Also, markets will track the fourth phase of the voting, going on today. Traders will be concerned amid foreign fund outflows. Indian markets have witnessed aggressive selling by Foreign Portfolio Investors (FPIs) in May, with a staggering amount of Rs 17,082 crores as per data by National Securities Depository. Weak macro-economic data likely to dent sentiments in the markets. The government data showed that India’s industrial production growth slowed marginally to 4.9 per cent month-on-month in March 2024, mainly due to poor show by the mining sector. The factory output growth, measured in terms of the Index of Industrial Production (IIP), was 5.6 per cent in February 2024. However, some support will come as India’s G20 Sherpa and former CEO of Niti Aayog Amitabh Kant projected that the country is all set to overtake Japan as 4th largest economy in the world by 2025, citing various macroeconomic parameters that are doing pretty well. The size of India’s GDP is currently ranked 5th, after the US, China, Germany, and Japan. It overtook the UK in 2022. Besides, the new president of the Associated Chambers of Commerce and Industry of India (Assocham), Sanjay Nayar said India is in a great spot and could realise a growth rate of about 7.6% or more in 2024-25. Traders may take note of RBI data showing that post three consecutive weeks of decline, India’s foreign exchange reserves rose again by $3.668 billion to $641.590 billion in the week that ended on May 3. There will be some buzz in the coal industry stocks with a private report that India's coal import rose by 7.7 per cent to 268.24 million tonne (MT) in FY24 driven by softness in seaborne prices and likelihood of increase in power demand during summer. The country's coal import was 249.06 MT in FY23. Space industry stocks will be in focus as ISRO Chairman S Somanath said the Indian space industry is offering a tremendous opportunity to the private sector in the country as a new area of growth and development. He said the union government envisages the space sector in the country to become a 9 to10 billion dollar industry in the next 5-10 years from the current levels of 2 billion dollars. There will be some reaction in defence industry stocks with a private report that India’s defence sector holds a lucrative ordering opportunity of $138 billion over FY24-32 amid the escalating demand for defence equipment, technologies, and services, offering significant prospects for companies engaged in defence production and technology development. Meanwhile, Shares of Indegene will debut on the stock markets on Monday, May 13. The company has fixed the issue price as Rs 490.

The US markets ended mostly in red on Friday amid signs of economic slowdown and persistent inflation. Asian markets are trading mixed on Monday due to slack in China and news of US President Joe Biden planning to increase tariffs on some Chinese goods.

Back home, Indian equity benchmarks ended in positive territory on Friday following upbeat trends in global markets. Markets made a positive start and remained in green throughout the day as traders took support after the Export-Import Bank of India forecasted India’s merchandise exports to grow 12.3% on-year at $116.7 billion in the April-June quarter of FY25, on strong economic fundamentals and sustained manufacturing and services activity. Some support also came with a private report that India’s retail market is poised to surpass $2.2 trillion by 2030, with approximately 90 per cent of sales expected to occur offline. The report also finds that a substantial portion of all purchases will be influenced by what consumers see online. Adding to the optimism, a recent report by the Ministry of Commerce said India's exports have increased to as many as 115 countries out of the total 238 destinations during 2023-24 despite the global economic uncertainties. These 115 export destinations, which account for 46.5 per cent of India's export basket, include the US, UAE, Netherland, China, UK, Saudi Arabia, Singapore, Bangladesh, Germany and Italy. However, gains remain capped as some pessimism remained among traders with report that as India's general election reaches halfway, declining voter turnout sparks concerns about disengagement in the world's largest poll. The decrease raises questions about the ruling Bharatiya Janata Party's support, causing uncertainty in financial markets. Some concern also came with private report stating that the Indian private equity and venture capital investments declined by about 35 per cent to around $39 billion in 2023 from $62 billion in 2022. The private equity (PE) investments in India dropped by 18 per cent to $29.6 billion from a peak value of $36 billion in 2022. The drop in VC investments was much sharper, with total investments at $9.6 billion in 2023 versus $25.7 billion in 2022. Besides, provisional data from the exchanges showed foreign institutional investors continued selling Indian equities as they net sold Rs 6,994.86 crore worth of shares on May 9, 2024.  Also, traders remained on sidelines ahead of India’s Index of Industrial Production (IIP) data to be out later in the day. Finally, the BSE Sensex rose 260.30 points or 0.36% to 72,664.47, and the CNX Nifty was up by 97.70 points or 0.44% points to 22,055.20.