Markets likely to get positive start tracking firm global cues

Indian markets staged a smart rebound and ended with notable gains on Wednesday as investors assessed increased prospects of the Bharatiya Janata Party (BJP)-led NDA forming the next government. Today, the markets are likely to get positive start tracking firm global cues with overnight gains on Wall Street as well as broadly positive cues from Asian counterparts. Some optimism will come as India Ratings and Research (Ind-Ra) projects that India's current account balance (CAB) will achieve a surplus of approximately $6 billion (0.6 per cent of GDP) in the fourth quarter of the fiscal year 2024 (Q4FY24). This marks the first surplus since the first quarter of fiscal year 2022 (1QFY22), a significant turnaround from the previous quarter's deficit of $10.5 billion (1.2 per cent of GDP). Besides, a day after the 18th Lok Sabha elections delivered a surprising outcome, Fitch Ratings reinforced its ‘positive’ outlook on India's medium-term economic growth. Once again, this outlook has been supported by substantial government capital expenditure and strengthened corporate and bank balance sheets. Meanwhile, the Securities and Exchange Board of India (Sebi) has relaxed the timeline for foreign portfolio investors (FPIs) for reporting and disclosing material changes. The regulator has also notified norms for FPIs whose registration has lapsed to liquidate their holdings in the domestic market. However, there may be some cautiousness amid foreign fund outflows. Foreign institutional investors (FIIs) remained heavy sellers for the second straight trading yesterday. FIIs net sold stocks worth Rs 5,656 crore on June 05. Aviation industry stocks will be in focus with a private report that India's domestic air traffic is expected to rise 6 to 8 per cent to 161 to 164 million in the current financial year. The report said international air traffic is projected to jump 9-11 per cent to 75 to 78 million in the fiscal ending March 2025. Besides, Aviation Secretary Vumlunmang Vualnam has expressed the government's unwavering confidence in the continued development of airport infrastructure across India. There will be some reaction in metal sector stocks as Icra revised its projection for domestic steel demand growth to 9-10% for the fiscal year 2025, citing robust government spending and strong demand from steel-consuming sectors. The agency noted a growth of 11.3% in domestic steel consumption between February and April 2024. Besides, the Insurance Regulatory and Development Authority of India (Irdai) Chairman Debasish Panda will meet chief executive officers (CEOs) of the Indian insurance industry in Mumbai on Thursday to review implementation of two ambitious projects, Bima Sugam and ‘Cashless Everywhere’. 

The US markets settled in green terrain on Wednesday amid rising hopes of Fed rate cut post subdued jobs data. Asian markets are trading mostly higher on Thursday optimism prevailed as hopes for a cut in the euro rate boosted investor confidence.

Back home, Indian equity benchmarks exhibited a spirited recovery after suffering heavy losses in the previous session and ended higher by over three percent on Wednesday, driven by broad based buying across various sectors, as political stability appears assured. However, attention will remain on the formation of the government and the forthcoming RBI policy meeting.  Markets made an optimistic start but soon tuned volatile amid foreign fund outflows. A huge selling was seen from foreign institutional investors (FIIs) on June 4 as they sold Indian equities worth Rs 12,436.22 crore. But recovery in heavyweight stocks helped indices gradually climb higher throughout the day. Traders took encouragement with a private report that India's world record beating economic growth rate together with robust tax revenues, a fast expanding digital and financial infrastructure and a strong manufacturing sector will give the new government a base for unleashing next generation reforms that may make the country a developed nation by 2047. Sentiments remained up-beat in late afternoon deals, as a private report stated that India's economic fundamentals remain robust, after the results of the country's general elections paved the way for Prime Minister Narendra Modi's third consecutive term in office. The Election Commission of India has declared results for all 543 Lok Sabha constituencies, with the BJP winning 240 seats and the Congress 99. Traders overlooked private survey showing that growth in India's services activity slowed to a five-month low in May as robust domestic demand weakened. The final HSBC India Services purchasing managers' index, compiled by S&P Global, fell to 60.2 in May 2024 from April's 60.8, confounding a preliminary reading for a rise to 61.4. However, it remained above the 50 mark separating growth from contraction for the 34th straight month. Finally, the BSE Sensex rose 2303.19 points or 3.20% to 74,382.24, and the CNX Nifty was up by 735.85 points or 3.36% points to 22,620.35.