Markets likely to get positive start tracking gains in global peers

Indian markets ended lower on Wednesday amid considerable selling pressure, weighed by broad-based profit booking. Today, markets are likely to get positive start tracking gains in global peers. Foreign fund inflows likely to aid domestic sentiments. On July 10, foreign institutional investors (FIIs) purchased shares worth Rs 583.96 crore. Traders will be taking encouragement as labour ministry said retail inflation for industrial workers eased to 3.86 per cent in May compared to 4.42 per cent in the same month a year ago. The Consumer Price Index-Industrial Workers (CPI-IW) was 3.87 per cent in April 2024. Some optimism will come as a State Bank of India (SBI) report showed that between FY14 and FY23, India generated 125 million jobs, which is 4.3 times more than the preceding decadal period of FY04-FY14. Some support will come as Commerce and Industry Minister Piyush Goyal expressed the government’s commitment to staying on the reform path while addressing concerns of the common man. He also sought greater industry participation and investments in research & development and innovation to achieve the Viksit Bharat goal. Traders may take note of report that former Reserve Bank of India (RBI) Governor Raghuram Rajan called on India to prioritise the enhancement of its service sector over the expansion of manufacturing to achieve sustainable economic growth and create jobs. Rajan argued that manufacturing is not the Holy Grail for India’s economic success. Meanwhile, India and Austria have underscored the importance of sustainable economic partnership and supported the cooperation between institutions in renewable/green hydrogen. The Prime Minister held bilateral discussions with Chancellor Karl Nehammer. However, there may be some cautiousness ahead of retail inflation figures to be out on July 12. as per a private report, India’s retail inflation, based on the Consumer Price Index (CPI), likely rose to a four-month high of 4.9% in June due to increase in vegetable prices in the backdrop of delayed monsoon. The estimates ranged from 4.5% to 5.19%. Banking stocks will be in focus after the Reserve Bank of India permitted banks to use ratings by Brickwork Ratings India for loans of up to Rs 250 crore. The RBI, in October 2022, asked banks and other regulated entities not to obtain any fresh ratings from Brickwork Ratings India.

The US markets ended higher on Wednesday in anticipation of inflation and jobless claims data. Asian markets are trading in green on Thursday on the back of a rally in technology stocks and optimism around potential rate cuts.

Back home, Indian equity benchmarks erased previous session gains and buckled under heavy selling pressure on Wednesday, tracking deep losses in metal, auto and IT stocks amid widespread profit booking after recent gains. After making a slightly positive start, key gauges quickly slipped into red terrain, as traders turned cautious with a private report stating that India consumer price inflation probably edged up in June, snapping five months of declines, largely because of a jump in vegetable prices caused by the damage to crops wrought by extreme weather. Traders also awaited the onset of a new earnings season for domestic cues, with Tata Consultancy Services (TCS) - the country’s largest IT Company - scheduled to report its financial results for the April-June period on Thursday. However, markets managed to recoup some of the losses in final hour of trading session, amid foreign fund inflows. Foreign institutional investors (FIIs) purchased shares worth Rs 314.46 crore on July 09. Traders also took some support with global rating agency, Moody’s report in which it kept India’s 2024 growth forecast unchanged at 6.8 percent from its March forecast. The rating firm predicted Indian economy to grow 6.4 percent in 2025. It said increasing domestic and overseas demand is supporting GDP growth in emerging markets (EMs), with wide variation by country. Traders took note of report that India and Russia are looking to raise bilateral trade to $100 billion by 2030, balance the lopsided trade, eliminate non-tariff trade barriers, and explore the possibility of a Eurasian Economic Union (EAEU)-India Free Trade Area. But, markets were unable to erase all the losses and ended with a significant dip as traders remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out on July 12. Finally, the BSE Sensex fell 426.87 points or 0.53% to 79,924.77, and the CNX Nifty was down by 108.75 points or 0.45% points to 24,324.45.