Markets likely to get cautious start amid fading hopes of early US rate cut

Indian markets ended a range-bound session with decent gains on Wednesday on buying in bluechip -- Reliance Industries and Infosys amid mixed cues from global markets. Today, markets are likely to get cautious start after minutes of the last US Federal Reserve meeting revealed Fed officials' concerns over sticky inflation, with members seemingly getting cold feet on possible interest rate cuts. Foreign fund outflows likely to dent sentiments in domestic markets. Foreign institutional investors sold Indian equities worth Rs 686 crore on May 22. However, traders may take note of report that the Reserve Bank of India's board approved transfer of Rs 2.11 trillion ($25.35 billion) as surplus to the federal government for the fiscal year ended March. As per the interim budget estimates for fiscal year 2024/25, the Narendra Modi-led government had budgeted for a dividend of Rs 1.02 trillion from the central bank, state-run banks and other financial institutions. Some support may come with a private report that India is seen as an emerging economic superpower of the world. India’s central bank in its monthly economic review says “there is a growing optimism that India is on the cusp of a long awaited economic take-off.” India is positioned to remain the fastest-growing major economy, demonstrating resilience amid geopolitical challenges and supply chain pressures. Gold and jewelary industry stocks will be in focus with Crisil’s report that benefiting from strong sales, organised gold jewellery retailers are set to clock 17-19 per cent revenue growth in the current financial year 2024-25. The rating agency asserted that the projected revenue would be driven by higher realisations stemming from elevated gold prices, while volume remains steady. There will be some reaction in paper industry stocks as The Indian Paper Manufacturers Association (IPMA) said imports of paper and paperboard in the country rose by 34 per cent to 19.3 lakh tonnes in 2023-24, driven by higher shipments from ASEAN countries. It added that the increasing imports of these products are hurting the domestic industry. Stocks of agrochemical industry will be in limelight with a private report that the Indian agrochemicals industry is projected to clock a robust compound annual growth rate (CAGR) of nine per cent from FY2025 to FY2028, driven largely by government support, expanding production capacities, a flourishing domestic and export market, and a steady stream of innovative products. Meanwhile, ITC, InterGlobe Aviation, Honasa Consumer, Bayer Cropscience, Cello World, CESC, Concord Biotech, Finolex Cables, Page Industries, Tata Investment Corporation, and Zaggle Prepaid Ocean Services will release March quarter earnings on May 23. Moreover, Shares of Go Digit will list on the bourses today, where the issue price has been fixed as Rs 272.

The US markets ended lower on Wednesday as investors parsed minutes from the U.S. Federal Reserve's most recent policy meeting. Asian markets are trading mixed on Thursday as markets digested the implications of policymakers in major economies preferring to take patient approach to monetary easing amid sticky inflation.

Back home, Indian equity benchmarks ended a range-bound session on a positive note on Wednesday aided by buying in Realty, FMCG and IT stocks. After making a slightly positive start, markets turned cautious amid foreign fund outflows. Foreign institutional investors (FIIs) offloaded shares worth Rs 1,874.54 crore on May 21. Some concern also came as domestic rating agency ICRA projected India's GDP growth to moderate to a four-quarter low of 6.7 per cent in March quarter of 2023-24 fiscal. For the full 2023-24 fiscal, ICRA estimates GDP growth to come in at 7.8 per cent. ICRA Chief Economist, Head-Research & Outreach Aditi Nayar said the lower volume growth coupled with diminishing gains from commodity prices dampening the profitability of some of the industrial sectors is expected to dampen India's GVA growth in Q4 FY2024. However, markets soon gained some positive momentum and managed to keep their heads above water for whole day as traders took support after an article on the state of the economy published in the Reserve Bank of India’s (RBI's) May Bulletin noted that India is likely to grow by 7.5 per cent in the first quarter of the current financial year (Q1FY25), with rising aggregate demand and non-food spending in the rural economy. Sentiments remained positive amid a private report stating that private sector investment is likely to pick up in the second half of the current financial year in sectors like hotel and tourism, after years of government-led robust capex to promote infrastructure building. The government has been pushing capital expenditure to promote economic growth. The push in expenditure has helped the country sustain the growth momentum in the aftermath of the Covid pandemic. Finally, the BSE Sensex rose 267.75 points or 0.36% to 74,221.06, and the CNX Nifty was up by 68.75 points or 0.31% points to 22,597.80.