Markets likely to get gap-down opening tracking sell-off in global markets

Indian markets ended week's last trading session in the negative territory on Friday amidst weak global cues. Today, markets are likely to get gap-down opening tracking sell-off in the global markets. The resurgence of recession fears in the US economy, coupled with earnings disappointment by IT giants and renewed strength in the Japanese Yen has crippled global markets. That apart stock traders are also closely tracking developments in the Israel-Iran conflict. Additionally, investors will be keeping an eye on data from the private sector and services, as well as quarterly earnings reports today. Looking ahead, the RBI's monetary policy decision, scheduled for August 8, will also be closely watched. Reserve Bank of India (RBI) is likely to keep the key interest unchanged at 6.5 per cent on Thursday, and wait for more macroeconomic data before taking a call on rate cut in line with expectations. Foreign fund outflows likely to dent sentiments. On Friday, foreign institutional investors (FIIs) net sold stocks worth Rs 3,310 crore. There will be some cautiousness as data from the central bank showed India's foreign exchange reserves halted a three-week gaining streak and stood at $667.39 billion as of July 26, coming off record highs. However, some support will come with a report that India’s unemployment rate (UR) dropped by 1.3 percentage points in July from an eight-month high of over nine per cent in the previous month. The UR fell to 7.9 per cent in July from 9.2 per cent in June. Traders may take note of Niti Aayog member Ramesh Chand’s statement that agriculture has been a key focus area of development strategy in India, and the country has achieved the highest growth rate of 5 per cent in the farm sector during the seven years from 2016-17 to 2022-23. Meanwhile, the buoyant primary markets will soon receive additional support from the Securities and Exchange Board of India (Sebi). Plans are underway to streamline IPO filing and introduce a new fundraising avenue for listed companies, reducing turnaround time in a bid to encourage private capital expenditure. Tyre industry stocks will be in limelight with report that Tyre manufacturers are grappling with unprecedented raw material costs as natural rubber prices touched a 10-year high in June 2024. This surge has prompted leading companies like CEAT and JK Tyres to increase prices in an effort to offset the rising costs. There will be some reaction in tourism industry stocks as a FICCI-Nangia knowledge paper stated that India’s outbound tourism market is expected to reach $18817.72 million ($18.81 billion) in 2024 and grow at a CAGR of 11.4 per cent in the decade between 2024 and 2034 to reach approximately $55388.41 million ($55.38 billion). There will be some buzz in telecom stocks as industry body COAI said Telecom regulator Trai's new quality of service norms with stricter provisions have come without much change in challenges that telecom operators face on ground in terms of roll-out, illegal transmitters etc. The Telecom Regulatory Authority of India (Trai) has issued new quality of service rules on Friday, making it mandatory for telecom operators to compensate subscribers in case of service outages for more than 24 hours at a district level.

The US markets ended lower on Friday following a weaker-than-expected July jobs report, raising concerns about a potential recession. Asian markets are trading in red on Monday as investors anticipated crucial trade data from China and Taiwan this week, along with upcoming central bank decisions from Australia and India.

Back home, Indian equity benchmarks ended with deep cuts on Friday in line with a global sell-off as investors dialled back risk exposure in Realty, Metal, Auto and IT stocks after weak US job data. Markets traded on negative note since the beginning, impacted by the India Meteorological Department’s (IMD) statement that the monsoon during the remaining two months of the season (August-September) on average is expected to be above-normal with September poised to get more rain than August. The forecast assumes significance as more than normal rains in September, the last month of the four-month season may hurt the standing kharif crops depending on their stage of maturity. Traders took a note of the Global Trade Research Initiative (GTRI) stating that strategic reforms are needed to enhance India's appeal to global investors as despite having huge potential, FDI data shows that the country has not fully capitalised on its opportunities. In the second half of the session, benchmarks saw further fall to settle near their intraday low points, as traders reacted negatively to Reserve Bank’s latest data showing that an unfavourable base effect brought down the overall non-food credit growth of the banks to 13.9 per cent at Rs 163.46 lakh crore as of June 30, 2024 as against 16.3 per cent in June 2023, even as gold and housing loans rose sharply. The growth in credit card outstanding, meanwhile, declined during the 12-month period. Traders largely overlooked the government data showing that GST collection in July rose 10.3 per cent to over Rs 1.82 trillion, mainly driven by domestic transactions in goods and services. This is the third-highest monthly collection recorded since the indirect tax regime was rolled out seven years ago on July 1, 2017. According to the data, total refunds stood at Rs 16,283 crore in July. Traders failed to take any sense of relief from Union Minister of Commerce & Industry, Piyush Goyal’s statement that a stable economy will push India to be among the top 3 world economies. He also noted that the Centre will ensure a better quality of life to the last man at the bottom of the pyramid in the next five years, adding that the government is also focused on efforts to replace the oil economy with electric mobility and making quality the fulcrum in manufacturing. Finally, the BSE Sensex fell 885.60 points or 1.08% to 80,981.95, and the CNX Nifty was down by 293.20 points or 1.17% points to 24,717.70.