Domestic indices likely to get flat-to-positive start amid lack of triggers

Indian markets remained volatile all through the day and ended with marginal gains on Thursday, as investors adjusted their position amid the weekly F&O expiry. Today, the domestic indices are likely to get flat-to-positive start amid lack of triggers. Investors may seek direction from manufacturing and services PMI Flash data to be released during the day. Market participants will also keep eye on the RBI’s minutes of its recently concluded Monetary Policy Meeting to be out later in the day. Foreign fund inflows likely to aid sentiments. Foreign institutional investors (FIIs) were net buyers for the fourth straight day on Thursday. FIIs net bought stocks worth Rs 415.30 crore on June 20. Traders will be taking encouragement as RBI Governor Shaktikanta Das said that the Indian financial system is in a much stronger position, characterised by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-banking lenders. Some support will come as the latest monthly payroll data released by the Employees’ Provident Fund Organisation (EPFO) showed that the number of fresh formal jobs generated in a month increased to a seven-month high in April, signalling a recovery in the formal labour market in the country. However, there may be some cautiousness as a report by the United Nations Conference on Trade and Development (UNCTAD) said Foreign Direct Investment (FDI) flows to India plummeted by 43 per cent in 2023 to $28 billion amid a global decline of 2 per cent. Meanwhile, the Securities and Exchange Board of India (Sebi) has imposed additional measures and surveillance to curb manipulation in the process involved to compute the opening price for a stock on the day of its listing following an initial public offering (IPO). Information Technology (IT) stocks will be in focus after Dublin-based Accenture released its Q3FY24 results on Thursday. It has slightly lowered its revenue guidance for the year. There will be some reaction in insurance company’s stocks as IRDAI said insurance companies cannot advertise unit-linked or index-linked products as investment products. Metal stocks will be in limelight as CRISIL report said that in a shift from its status as a net exporter of steel since fiscal 2017, India has become a net importer in fiscal 2024, recording an overall steel trade deficit of 1.1 million tonnes (MT).

The US markets ended mostly in red on Thursday as Nvidia cooled its recent rally, dragging the broader tech sector lower and flurry of economic data pointing to signs of a weaker economy. Asian markets are trading mostly lower on Friday following a drop in US shares overnight. Attention shifted to the yen after it endured a six-day slide, heightening intervention risks.

Back home, Indian equity benchmarks remained volatile throughout the day but managed to end marginally higher on Thursday led by buying in Realty, Basic Materials and Metal stocks. Benchmark indices made a slightly positive start but soon turned cautious as investors adjusted their position amid the weekly F&O expiry. Some concern came as the ministry of labour and employment stated that formal job creation under the Employees’ State Insurance Corporation (ESIC) fell by 7.8% to 1.64 million in April 2024 as against 1.78 million in the corresponding month last year. Traders also remained cautious with the RBI Bulletin stating that retail inflation is gradually easing, but volatile and elevated food prices are interrupting the path of disinflation. In article on the ‘State of the Economy’, published in the June 2024 Bulletin, it said global growth was resilient in the first quarter of 2024, and many central banks have pivoted towards a less restrictive monetary policy stance in response to the fall in inflation in their economies. However, markets showed gradual upside momentum in late morning deals and traded with gains till the end as traders found support with global rating agency Fitch Ratings’ statement that India will see higher Consumer spending with elevated consumer confidence. Expectations of better than expected monsoon will support growth and make inflation less volatile. The rating agency has elevated India’s growth forecast by 20 basis point to 7.2 per cent for fiscal year 2024-25. Earlier in March Fitch has forecasted India’s growth at 7 per cent. Besides, foreign fund inflows also aided domestic sentiments. Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 7,908.36 crore on June 19. Traders took note of report that government has hiked Minimum Support Prices (MSP) for all mandated Kharif Crops for Marketing Season 2024-25. This move aimed to ensure remunerative prices to the growers for their produce. The MSP of paddy (Common) has been raised by Rs 117 to Rs 2,300 per quintal. Jowar, Bajra, Ragi and Maize’s MSP have been increased to Rs 3371 (Jowar Hybrid) - 3421 (Jowar Maldandi), Rs 2625, Rs 4290 and Rs 2225 per quintal respectively. Finally, the BSE Sensex rose 141.34 points or 0.18% to 77,478.93, and the CNX Nifty was up by 51.00 points or 0.22% points to 23,567.00.