Markets likely to magnify previous session’s gains with positive opening

Indian equity markets settled higher on Tuesday on account of buying in Power Grid, Wipro, ICICI Bank, Mahindra & Mahindra and Titan Company companies’ stocks. Today, markets are likely to make positive start on firm global cues. Traders will be getting support as the government's direct tax collection in the April 1-June 17 period, net of refunds, increased 20.99% year-on-year to Rs 4.62 lakh crore. Net tax collection stood at Rs 3.82 lakh crore in the year-ago period. The net direct tax collection comprised Rs 1.81 lakh crore as corporate income tax and Rs 2,81,013 crore as personal income tax, including securities transaction tax. Further, foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 2,569.40 crore on June 18. Besides, some support may come in as the government proposed to amend the export obligation period for wheat, raw sugar, natural rubber, spices, pharmaceuticals and tea, among other sectors to facilitate their exports. Traders may take note of report that Reserve Bank of India Governor Shaktikanta Das said India should avoid adventurism and continue to focus on bringing down inflation towards the target of 4% despite the growing clamour to signal a pivot in monetary policy. He stated ‘At this point there is again clamour that one should change the stance. But we want clear evidence that inflation should moderate and perhaps a little faster. It will be too premature to talk in terms of changing the stance’. 

On the global front, Asian markets are trading mostly higher in early deals on Wednesday following positive cues from the US markets overnight. Traders in Asia assessed Japan’s trade data for May, which showed exports grew 13.5% year on year, while imports grew 9.5% during the same period. The US markets ended higher on Tuesday following the release of a mixed batch of U.S. economic data. 

Back home, Indian equity benchmarks ended higher for the fourth day in a row on Tuesday, helped by hectic buying in market heavyweights Power Grid Corporation, Wipro and Titan Company amid a firm trend in global equities. After opening on a positive note, the markets shifted into a range bound movement with positive bias throughout the day, as traders took encouragement with President of the Confederation of Indian Industry (CII) stating that within a few years, India will undoubtedly be among the world’s top three economies. Some support also came as data from the Reserve Bank of India (RBI) showed India's foreign exchange reserves jumped $4.307 billion to touch a new lifetime high of $655.817 billion during the week that ended June 7. The reserves have been rising on and off for a long time now. So far in 2024, they have risen over $30 billion, on a cumulative basis. Besides, fresh foreign fund inflows boosted investor confidence. Foreign Institutional Investors (FIIs) bought equities worth Rs 2,175.86 crore on Friday, according to exchange data. A firm trade continued over the Dalal Street in second half of trading session, as Fitch Ratings raised India's growth forecast for current fiscal to 7.2 per cent, from 7 per cent projected in March, citing a recovery in consumer spending and increased investment. For the fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 per cent and 6.2 per cent, respectively. Sentiments remained optimistic as India and the US have agreed to closer engagement and cooperation on supply chain, semiconductors and critical minerals during the meeting of the India-US initiative on Critical and Emerging Technology (iCET), led by Indian National Security Adviser Ajit Doval and his US counterpart Jake Sullivan in New Delhi. However, gains remained capped as some concern came with domestic rating agency ICRA’s statement that India Inc are bracing for revenue uncertainties in the April-June period (Q1FY25) due to a slowdown in government spending during the Parliamentary elections and the onset of the annual monsoon season. Finally, the BSE Sensex rose 308.37 points or 0.40% to 77,301.14, and the CNX Nifty was up by 92.30 points or 0.39% points to 23,557.90.