Markets likely to get optimistic start tracking strong gains on Wall Street

Indian markets hit fresh lifetime high levels before closing flat with negative bias due to profit-taking in select banking and telecom shares amid mixed global cues. Today, markets are likely to get optimistic start tracking strong gains on Wall Street as well as broadly positive cues from Asian counterparts. Investors will be looking ahead to the HSBC Composite and Services data to be announced later in the day. That apart, Bank Nifty will be on traders’ radar ahead of the weekly expiry. Traders will be taking some encouragement with Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister of India, forecast reaching a $4 trillion GDP milestone this year, outpacing global growth rates. Some support will come as the India Meteorological Department (IMD) said the southwest monsoon covered the entire country on Tuesday, six days ahead of its normal date, boosting prospects of kharif sowing. Besides, the Reserve Bank of India (RBI) has proposed rationalisation of norms governing export and import transactions to promote ease of doing business and empower banks to deliver quicker and more efficient services to foreign exchange customers. However, foreign fund outflows likely to dent sentiments. Foreign institutional investors (FIIs) were net sellers of stocks to the tune of Rs 2,000 crore on Tuesday. There may be some cautiousness with a private report that the pace of foreign inflows into the government bond market, following the inclusion of Indian bonds in JPMorgan's Government Bond Index-Emerging Markets (GBI-EM), has been slower than expected, maintaining yield stability. The report added the absence of substantial domestic triggers, combined with a series of impending data releases scheduled for the week, has played a role in keeping yields anchored. There will be some buzz in railways stocks as data released by the ministry of railways showed that Indian Railways witnessed a 10 per cent increase in freight loading in June, marking a rare double-digit rise in its goods transportation in the past few months. the ministry said during the month of June 2024, originating freight loading of 135.46 million tonnes (mt) has been achieved against loading of 123.06 mt in June 2023, which is an improvement of around 10.07 per cent over last year. Coal industry stocks will be in focus as provisional figures of the government showed that the country's coal production rose by 14.49 per cent to 84.63 million tonne (MT) in June. The country's coal output was 73.92 MT in June last fiscal. Meanwhile, Shares of Vraj Iron and Steel to list today, while Diensten Tech to debut on the NSE-SME platform. 

The US markets ended in green on Tuesday after Federal Chief Powell said he was encouraged by cooler inflation, and said the latest data signaled that the US was getting back on a disinflationary path. Asian markets are trading mostly higher on Wednesday following remarks by US Federal Reserve Chair Jerome Powell indicating progress in controlling inflation.

Back home, Indian equity benchmarks fluctuated between gains and losses throughout the day and finally ended flat with negative bias on Tuesday due to profit-taking in select Telecom, Banking and Auto shares. Markets opened at record highs but soon wiped out all their gains and slipped into red, as a surge in crude oil prices to a two-month high revived concerns about inflation and interest rates. However, markets witnessed some buying in late morning deals as traders took support with Commerce and Industry Minister Piyush Goyal’s statement that the Centre is committed to create a business-friendly environment for industry and innovation. The minister said such interactions are key for understanding the challenges faced by the industry and policy-making. Some support also came with the India Meteorological Department’s (IMD) statement that after an uneven run in June, the southwest monsoon is expected to become vigorous in July with all-India average rain across the country predicted at 106 per cent of the long-period average (LPA), which is above normal. Buying proved short-lived as key indices once again entered into red terrain in afternoon deals, as some pessimism remained among traders as the Indian government has raised the windfall tax on petroleum crude to 6,000 rupees per metric ton from 3,250 rupees, with effect from July 2. The Special Additional Excise Duty (SAED) on the export of diesel, petrol, and ATF is to continue at nil. But, markets managed to trim losses towards end, taking support from data showing that the gross Goods and Services Tax (GST) collection surged 8 per cent to Rs 1.74 lakh crore in June 2024 as compared to Rs 1.61 lakh crore mopped up in June 2023, reflecting a buoyant economy, with businesses demonstrating commendable self-compliance. Meanwhile, the commerce ministry has sought views of different departments on proposed measures to revive special economic zones and facilitate business transactions between SEZ and the domestic market. The ministry has suggested allowing the sale of products manufactured in Special Economic Zones (SEZs) in the domestic market on payment of duty foregone on inputs as that would help promote value addition. Finally, the BSE Sensex fell 34.74 points or 0.04% to 79,441.45, and the CNX Nifty was down by 18.10 points or 0.07% points to 24,123.85.