Markets likely to get optimistic start amid Q1 results announcements

Indian markets ended higher on Friday and hit fresh record levels led by Information Technology (IT) stocks after TCS' Q1 earnings met the expectations. Today, markets are likely to get optimistic start tracking Friday’s gains on Wall Street amid April-June quarter (Q1) results announcements on domestic front. Markets will react to the Q1 FY25 earnings report by HCL Tech, released after market hours on Friday, and will track June quarter results of Angel One, Den Networks, Hatsun Agro, HDFC AMC, HDFC LIfe, Jio Financial Services, and Bank of Maharashtra. Investors will also track newsflow around Donald Trump's assassination attempt, China's GDP, and Industrial Production data, and US Fed chief Jerome Powell's speech. Foreign fund inflows likely to aid sentiments in the domestic markets. The Foreign Portfolio Investment (FPI) in the Indian equity market increased by Rs 7,390 crore during the second week of July, according to investment data from the National Securities Depository. The data also pointed out that the net investment by Foreign Portfolio Investors (FPIs) in July has increased to Rs 15,352 crore. Traders will be taking encouragement as the government data showed that the industrial output growth surprised in May rising to a seven month high of 5.9 percent from 5 percent in the previous month, as manufacturing and electricity production soared. Some support will come as income tax department said India's net direct tax collections grew 19.54 percent to Rs 5.74 lakh crore till July 11 in the current financial year as compared to Rs 4.80 lakh crore in FY24 in the corresponding period. Sentiments will get boost as Commerce and Industry Minister Piyush Goyal said India's exports have recorded healthy growth in May and remained in the positive zone in June and the first quarter of the current fiscal despite global challenges. He also said that growth in the services sector is helping the country's outbound shipments to register positive growth rates. Traders may take note of Reserve Bank of India (RBI) deputy governor Michael Patra’s statement that India could emerge as the world's second largest economy by 2031 and the largest economy by 2060, riding on a stable investment rate, macroeconomic and financial stability, favourable demographics and growth multipliers like digitisation. However, there may be some cautiousness as India’s retail inflation rose to four-month high of 5.08 percent in June compared with 4.75 percent in the previous month as food inflation galloped to 9.4 percent given the impact of heatwave on vegetables. Inflation had dipped to a 12-month low of 4.75 percent in the previous month, despite food inflation hovering around 8.7 percent. There will be some reaction in port and shipping sector stocks as the Union Ministry of Ports, Shipping, and Waterways (MoPSW) approved a research proposal on Valorization of Dredged Sediments. According to a statement by the ministry on Saturday, the project has been sanctioned at an estimated cost of Rs 46,47,380.

The US markets ended higher on Friday on bets that the U.S. Federal Reserve will cut interest rates in September, while big banks fell after reporting mixed results. Asian markets are trading mostly in red on Monday as investors awaited China’s Third Plenum and also assessed an assassination attempt on former U.S. President Donald Trump at a rally over the weekend.

Back home, Indian equity benchmarks gained sharply on Friday to end at record closing peaks, backed by a surge in IT, TECK and FMCG stocks. The upbeat mood among investors was also fuelled by better-than-expected inflation figures in the US, lifting hopes of an interest rate cut. Markets made a positive start as traders took support with Government e Marketplace (GeM) CEO Prashant Kumar Singh’s statement that the government's GeM portal has clocked a gross merchandise value of Rs 1,24,761 lakh crore at the end of first quarter (Q1FY25), representing a quarter-on-quarter growth of 136 per cent over last year's Rs 52,670 crore. He said that going by this pace, it will become the world's largest platform. South Korea's KONEPS is the largest such platform in the world.  Markets extended their gains in late morning deals as sentiments remained up-beat with the NITI Aayog member Arvind Virmani’s statement that the Indian economy will grow around 7 per cent in the current fiscal year and is on track to maintain a similar growth rate for several years. Markets continued their gaining momentum in late afternoon session, taking support from Union Minister Hardeep Singh Puri’s statement that that India offers an investment opportunity of at least $100 billion by 2030 in the Exploration and Production of energy. Traders overlooked the Reserve Bank of India (RBI) Governor, Shaktikanta Das’ statement that it was too early to talk about a cut in policy rates given the uncertain global economic environment and a persistently high home consumer inflation, which has trended above the central bank's legally mandated target. Traders also paid no heed towards latest data released by the Reserve Bank of India (RBI) showing that deposit growth of commercial banks further slowed down to 10.64 per cent for the fortnight ending June 28. Credit growth also declined during the period. Markets eyed the earnings season and the eagerly anticipated 2024 Union Budget on July 23. Traders also 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 rose 622.00 points or 0.78% to 80,519.34, and the CNX Nifty was up by 186.20 points or 0.77% points to 24,502.15.