Markets likely to get cautious start; manufacturing PMI data eyed

Indian markets ended lower on Friday, after having hit record highs in the previous session. Traders opted to book some profits as crude prices continued to rise in international markets. Today, the beginning of the trading action for the second-half of calendar year 2024 is likely to be cautious amid mixed cues from Asian counterparts as well as investors are looking ahead to the India manufacturing PMI data to be out later in the day for more directional cues. Traders will be concerned as government data showed growth of the eight core sectors in India slowed to 6.3 per cent on an annual basis in May, mildly down from 6.7 per cent registered in April. There will be some cautiousness as a report by Ministry of Statistics & Programme Implementation (MoSPI) showed that retirement fund body EPFO's gross new subscribers addition declined by over 4 per cent to 10.9 million in 2023-24 compared to a year ago. However, some respite may come later in the day as the data released by the Controller General of Accounts (CGA) showed that a fiscal surplus of Rs 1.6 trillion in May due to the Reserve Bank of India’s (RBI’s) record dividend transfer narrowed the Centre’s fiscal deficit for the first two months of 2024-25 to Rs 0.5 trillion or 3 per cent of the full-year estimate. Traders will be taking encouragement as Commerce and Industry Minister Piyush Goyal said healthy increase in the country's exports, improvement in the current account deficit (CAD) and focus on expanding manufacturing will help the Indian economy register a healthy growth rate. The minister expressed confidence that the country's goods and services exports would cross $800 billion this fiscal. It was $778 billion in 2023-24 and $776 billion in 2022-23. Some support may come as RBI's monetary policy committee member Shashanka Bhide said Indian economy is poised for potentially a stable high growth phase and it is also in a strong position in the context of significant risks that the country is facing. Meanwhile, India has initiated an anti-dumping probe into the import of glass fibre from China, Thailand, Bahrain following a complaint by a domestic player. The duty is aimed at protecting the domestic industry from cheap imports. There will be some reaction in telecom companies stocks with the telecom operators hiking tariffs by up to 25% in the past two days. While Reliance Jio hiked tariffs by 12-25% on Thursday, Bharti Airtel went for a 10-21% increase, followed by 10-23% by Vodafone Idea on Friday. Auto stocks will be in focus as traders will be reacting to the monthly auto sales figures.

The US markets ended lower on Friday as investors absorbed data that showed U.S. monthly inflation was unchanged in May. Asian markets are trading mixed on Monday as investors evaluated China's official June business activity data and Japan’s business confidence readings.

Back home, Indian equity benchmarks settled lower on Friday, taking a breather from a record-hitting spree, as investors booked profit in Banking, Telecom and TECK stocks despite a positive trend in global equities. Markets made a positive start and remained in green in first half, as traders took support with the Reserve Bank of India (RBI) in its Financial Stability Report (FSR) stating that India’s economy and its financial system are both strong and resilient. This stability is supported by strong macroeconomic fundamentals and a sound financial system. The RBI points out that with healthier balance sheets, banks and financial institutions in India are actively supporting economic activities through consistent credit expansion. Some support also came as Commerce and Industry Minister Piyush Goyal held meetings with export promotion councils as well as industry associations to discuss strategies to enhance global market outreach, further boost India's exports by focusing on key sectors, and addressing trade barriers. Further, foreign fund inflows helped domestic sentiments. Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 7,658.77 crore on June 27. However, markets erased most of their initial gains and turned volatile in afternoon deals as traders got cautious with the RBI governor Shaktikanta Das in his foreword in the bi-annual financial stability report (FSR) stating that Indian financial institutions have strong balance sheets, low levels of impairments and strong capital buffers, but the Reserve Bank of India (RBI) remains watchful of the emerging risks, including those from cyber hazards, climate change and global spillovers.  Some concern also came as a private report stated that India's security establishment is advocating a cautious approach to any unhindered and blanket approval to the FDI proposals from China given the history of corporate behaviour of Chinese companies in the country.  Markets gained some positive momentum in late afternoon deals but failed to hold gains and closed the trading session in red territory. Finally, the BSE Sensex fell 210.45 points or 0.27% to 79,032.73, and the CNX Nifty was down by 33.90 points or 0.14% points to 24,010.60.