Indian markets likely to get gap-up start as exit polls indicate NDA win, robust Q4FY24 GDP data

Indian markets ended with modest gains on Friday as a downward revision to U.S. first-quarter GDP data revived hopes for Fed rate cuts this year. Today, markets are likely to make huge gap-up start following the release of exit polls, which predict a strong victory for the NDA coalition, coupled with robust Q4FY24 GDP data. India's Q4 GDP grew 7.8 per cent, beating estimates. Now, all eyes are on the Lok Sabha election results, which will be announced on June 04. Foreign fund inflows likely to aid sentiments. Foreign institutional investors (FIIs) bought shares worth Rs 1,613.24 crore on May 31. Traders will be taking encouragement as Moody's Ratings projected India to grow 6.8 per cent in the current year, followed by 6.5 per cent in 2025, on the back of strong economic expansion, along with post-election policy continuity. It said strong, broad-based growth will likely be sustained with post-election policy continuity. Some support will as the government data showed that India’s goods and services tax (GST) collection in May rose 10 per cent year-on-year (Y-o-Y) to Rs 1.73 trillion, taking overall collection to Rs 3.83 trillion so far in the current financial year (FY25). Some optimism will come as the growth of eight core industries rose to 6.2% in April from 6% in March, mainly due to higher growth achieved in natural gas, refinery products, coal, steel and electricity sectors. Besides, aided by higher than expected tax receipts, the Union government contained the fiscal deficit - the gap between expenditure and revenue - at 5.6 per cent of the gross domestic product (GDP) in 2023-24 (FY24), compared with the Revised Estimates of 5.8 per cent. Meanwhile, market participants will be looking ahead to the manufacturing PMI data to be out later in the day for more directional cues. There will be some buzz in the auto stocks reacting to their sales numbers. Banking stocks will be in focus as Union Finance Minister Nirmala Sitharaman said the government is dedicated to expanding formal banking access and will continue to take decisive measures to strengthen and stabilise the banking system. There will be some reaction in aviation industry stocks as jet fuel or ATF price was reduced by a steep 6.5 per cent and that of commercial LPG used by hotels and restaurants by Rs 69 per 19-kg cylinder on declining international oil prices. Aviation turbine fuel (ATF) price was cut by Rs 6,673.87 per kilolitre, or 6.5 per cent, to Rs 94,969.01 per kl in the national capital, according to a price notification of state-owned fuel retailers. In the primary market, Kronox Lab Sciences’ Rs 130 crore IPO to open for subscription on Monday. The company is offering 66.99 lakh shares in the price band of Rs 129 - Rs 136. The offer closes on June 05, 2024.

The US markets ended mostly higher on Friday after the PCE price index data came in in-line with expectation, the PCE is Fed’s preferred inflation gauge. Asian markets are trading in green on Monday after a private survey showed China’s manufacturing activity expanded at its fastest pace in nearly two years.

Back home, Indian equity benchmarks snapped their losing run and ended marginally higher in the volatile session on Friday, on value-buying in Utilities, Realty and Power stocks.  Markets made a gap-up opening and stayed in green for most part of the trade, as traders took support with report stating that the southwest monsoon set in over the Kerala coast and parts of the Northeast earlier than the forecast, marking the start of its four-month journey over India. An early and timely onset of monsoon is also a good sign for 2024 kharif crop production. Some support also came as the Reserve Bank of India (RBI), in its annual report, projected Indian economy to grow at 7 percent in the current financial year with risks evenly balanced. Further, the report said India' GDP has expanded at a robust pace in 2023-24, with real GDP growth accelerating to 7.6 percent from 7 percent in the previous year - the third successive year of 7 percent or above growth. However, markets trimmed some of their initial gains in late morning trade as market participants remained cautious ahead of India’s gross domestic product (GDP) data for Q4FY24 and the results of the Lok Sabha polls. Traders remained cautious with a private report stating that India's economy is expected to have grown at a slower pace in the January-March quarter than the previous three months, dampened by a moderation in manufacturing and urban spending, but the street see economic momentum remaining strong in Asia's third-largest economy. Some concern also came as the Reserve Bank's annual report showed that the number of frauds in the banking sector went up to 36,075 in 2023-24 year-on-year, but the amount involved reduced by 46.7 per cent to Rs 13,930 crore. However, markets extended gains in late afternoon deals but failed to hold momentum and settled marginally higher. Finally, the BSE Sensex rose 75.71 points or 0.10% to 73,961.31, and the CNX Nifty was up by 42.05 points or 0.19% points to 22,530.70.