Markets likely to open in green amid easing inflation

Indian markets rebounded after opening in red and staged a smart recovery in the intraday trade to end higher on Monday amid bargain buying in Asian Paints, HDFC Bank, ICICI Bank, TCS, and Axis Bank. Today, markets are likely to open in green amid mixed global cues. Market participants likely to get some encouragement with easing inflation. The government data showed that retail inflation eased to an 11-month low of 4.83 per cent in April as prices of some kitchen items declined though overall food basket firmed up marginally. The Consumer Price Index (CPI)-based retail inflation was 4.85 per cent in March. Now, investor will be eyeing India's wholesale inflation data for April to be out later in the day. Traders may take note of report that the government is working on a verification system to help exporters deal with countervailing duty cases on domestic products over the RODTEP scheme. The exercise is important as countervailing or anti-subsidy duties were imposed on certain domestic units by the US and European Union (EU). Meanwhile, India and Iran have signed a 10-year contract for the operation of a terminal at the strategically important Chabahar port in Iran, a move that will boost regional connectivity as well as trade ties. This is the first time India will take over the management of an overseas port that will also have a multiplier effect on trade among India, Iran and Afghanistan as efforts continue to directly tap the potential in Central Asia, bypassing neighbouring Pakistan. However, there may be some cautiousness amid foreign fund outflows. On May 13, Foreign Institutional Investors (FII) offloaded equities valued at Rs 4,498.92 crore. Also, a private report indicated that more than a dozen states have logged a higher rate of inflation compared to the national average in April. The cost of living rose faster in 13 states last month compared to the national print of 4.83 per cent. Banking stocks will be in focus as Fitch Ratings said asset quality of Indian banks' consumer loans has held up well so far, but an accumulation of untested risks due to rapid growth may challenge lenders' underwriting standards and risk controls. There will be some reaction in e-commerce industry stocks with report that the government is considering to make it mandatory for e-commerce companies to comply with quality norms for consumer reviews after a voluntary push failed to effectively curb fake reviews. The government issued the new quality norms for e-tailers a year ago, prohibiting them from publishing paid reviews and demanding disclosure of such promotional content. On the earnings front, Bharti Airtel, Shree Cement, Siemens, Apollo Tyres, Bajaj Electricals, Colgate Palmolive, Bharti Hexacom, PVR Inox, Devyani International, and Ideaforge Technology are among others to reports their results later in the day.

The US markets ended mostly in red on Monday ahead of crucial inflation readings and earnings reports this week, as a survey revealed consumer concerns about rising prices. Asian markets are trading mixed on Tuesday amid report that Japan saw steady corporate inflation but a 6.4% jump in import prices.

Back home, Indian equity benchmarks bounced back from early lows and managed to eke out marginal gains on Monday on the back of fag-end buying in Capital Goods, Realty and Healthcare shares. Markets started the day on a negative note and stayed under pressure in the first half amid uncertainty among investors due to the ongoing parliamentary elections in India. Traders remained cautious amid sustained foreign fund outflows. Indian markets have witnessed aggressive selling by Foreign Portfolio Investors (FPIs) in May, with a staggering amount of Rs 17,082 crore as per data by National Securities Depository. Some pessimism also came as 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. Markets trimmed most of their losses in afternoon deals but continued to trade in red, as traders remained on sidelines ahead of India’s Consumer Price Index (CPI) data to be out later in the day. Some concern also came with Ministry of Statistics and Programme Implementation (MoSPI) in its latest report stating that as many as 449 infrastructure projects, each entailing an investment of Rs 150 crore or above, were hit by cost overrun of more than Rs 5.01 lakh crore in March 2024. Out of 1,873 projects, 449 reported cost overrun and 779 projects were delayed. However, by the end, key gauges staged a full recovery from the day's lows and ended up with a marginal gains. Traders found support with think tank GTRI stating that India's exports to the UAE increased by 18.25 per cent to $35.63 billion in 2023-24 as against $30.13 billion in 2018-19, while imports surged 61.21 per cent, from $29.79 billion in FY2019 to $48.02 billion in the last fiscal. Overall, India ranked 17th globally in exports, with a 1.8 per cent share in world trade. On the import front, the country is ranked 8th, holding a 2.8 per cent share in global trade. Finally, the BSE Sensex rose 111.66 points or 0.15% to 72,776.13, and the CNX Nifty was up by 48.85 points or 0.22% points to 22,104.05.