Markets likely to get cautious start ahead of Union Budget 2024-25

Indian markets ended lower for the second consecutive session on Monday amid selling in heavyweights as traders were cautious a day ahead of Union Budget announcements. Today, markets are likely to get cautious start and may remain volatile as investors eye key proposals by Finance Minister Nirmala Sitharaman for Union Budget 2024-25. The Narendra Modi-led Bharatiya Janata Party (BJP) is all set to present its first Budget under its third term with analysts expecting a mix of populist and reform-oriented announcements. The Union Finance Minister, Nirmala Sitharaman, will present her seventh straight budget for the full year of financial year 2024-25 in the Lok Sabha today at 11 AM. Foreign fund inflows likely to aid domestic sentiments. The foreign institutional investors (FIIs) bought equities worth Rs 3,444 crore on July 22. Some support may come with a private report that private equity funds and venture capital funds investments have risen 8 per cent year-on-year to $31.5 billion in the first half of 2024. As per the report, the amount of funds invested is 30 per cent higher than the July-December 2023 period. Some optimism may come as extending their support to the reforms proposed in the Economic Survey tabled by Finance Minister Nirmala Sitharaman in Parliament on Monday, industry bodies said that the pace of India's economic growth might surpass the predictions in the document. The survey has predicted that India is expected to grow at 6.5-7 per cent in 2024-25. It is in line with the estimates of the International Monetary Fund and the Asian Development Bank but less than the 7.2 per cent predicted by the Reserve Bank of India (RBI). Traders may take note of Chief Economic Advisor V Anantha Nageswaran’s statement that a 7 per cent GDP growth rate, the upper end of the projection made in the Economic Survey, is doable depending on monsoon and global financial risks. Besides, Prime Minister Narendra Modi said the Economic Survey highlights the prevailing strengths of the economy and identifies areas for further growth and progress as we move towards building a Viksit Bharat. Financial company’s stocks will be in focus after Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao said financial companies using digital outsourcing and their “third-party dependencies” have benefits but involve risks. There will be some reaction in tourism industry stocks as the Tourism ministry aid a total of 1.92 crore foreign tourists visited India last year, a jump from 10.54 lakh in the pandemic year of 2021. 

The US markets ended higher on Monday as investors returned to megacap growth stocks, helping both the S&P 500 and Nasdaq Composite recover from their worst weekly performance since April. Asian markets are trading mostly in green on Tuesday in line with the gains seen on Wall Street.

Back home, Indian equity markets ended the session marginally in red on Monday ahead of the Union Budget 2024-25 coupled with disappointing earnings from Reliance Industries and Wipro. After a sharp fall at the opening, indices soon staged recovery to trade in green amid foreign fund inflows. Foreign investors injected Rs 30,772 crore into Indian equities so far this month, driven by hopes of continued policy reforms, sustained economic growth and a better-than-expected earnings season. Some support also came as a recent report by the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) said that India is likely to have the highest per-capita income growth in the world at 5.4 per cent per annum during 2024-33, allowing it and other emerging economies to drive global consumption of agricultural and fisheries products in the next decade. However, the recovery was short-lived, as markets turned volatile during afternoon deals, amid mixed cues from Asian and European markets as Joe Biden announced his withdrawal from the 2024 presidential race against Donald Trump and China's central bank unexpectedly lowered its one-year benchmark loan prime rate to bolster a slowing economy. Market participants got cautious, after the Economic Survey said that the rising Geopolitical uncertainties will likely to exert a bigger influence on capital flows. However, downside remained capped with the Retirement fund body, Employees' Provident Fund Organisation’s (EPFO) latest ‘Provisional payroll data’ report showing that 19.50 lakh net members have been added in the month of May 2024. The addition during the month is the highest since the first payroll data was issued in April 2018. Further, the year-over-year analysis showed a growth of 19.62% in net member additions compared to May 2023. Finally, the BSE Sensex fell 102.57 points or 0.13% to 80,502.08, and the CNX Nifty was down by 21.65 points or 0.09% points to 24,509.25.