Domestic indices likely to get cautions start after CPI, IIP data

Indian markets recouped most of their early losses to close slightly lower in a volatile market on Monday, largely overlooking concerns from a new Hindenburg report alleging misconduct by SEBI chief Madhabi Puri Buch. Today, domestic indices are likely to get cautions start tracking mixed cues global markets. Foreign fund outflows likely to dent sentiments. On Monday, foreign institutional investors (FIIs) were net sellers of stocks to the tune of Rs 4,680.51 crore; thus far in August FIIs have net sold shares worth Rs 25,040.99 crore in the cash market. Some cautiousness will come as growth in the index of industrial production (IIP) declined to a three-month low of 4.2 per cent in June from the upward revised figure of 6.2 per cent in the preceding month. Traders will be concerned as a forecast by the Export-Import Bank of India (Exim Bank) showed that India’s merchandise exports growth may slow to 4.2 per cent year-on-year (Y-o-Y) in the September quarter of 2024-25 (FY25), down from 5.8 per cent in the June quarter. However, some respite may come later in the day India’s retail inflation rate, based on the consumer price index (CPI), in July fell below the Reserve Bank of India’s (RBI’s) medium-term target of 4 per cent for the first time since August 2019 on the back of a high base and sharp reduction in food prices. The data released by the National Statistical Office (NSO) on Monday showed the retail inflation rate decelerated to 3.54 per cent in July as against 5.08 in the preceding month and 7.44 per cent during the same month a year ago. Some support may come as the Income-Tax (I-T) Department’s latest data showed that India’s net direct tax collection, with refunds adjusted, grew 22.5 per cent to Rs 6.93 trillion between April 1 and August 11 of FY25. In the same period last year, tax collection was at Rs 5.65 trillion. Besides, S&P Global Ratings said credit quality and financial profile of Indian rated companies are expected to improve further on the back of declining leverage and broad-based earnings growth. Oil & gas industry stocks will be in focus amid concerns about demand after OPEC on Monday cut its forecast for demand growth in 2024 due to softer expectations in China. There will be some reaction in pharma stocks as ratings agency ICRA projected that the revenue of its sample set of Indian active pharmaceutical ingredients (API) producing firms is set to grow at a compound annual growth rate (CAGR) of 7 to 8 per cent by 2029. The agency expects the revenues to rise from an estimated size of $13 to 14 billion in 2023, driven by rising demand and softening raw material prices. Meanwhile, Brainbee Solutions (FirstCry) and Unicommerce eSolutions to debut on the bourses on Tuesday. Moreover, shares of RVNL, Vodafone Idea, Dixon Technologies, Oil India, Prestige Estates, Oracle Financial and Zydus Lifesciences will be included in the MSCI India Index as part of the latest rejig.

The US markets ended mostly in green on Monday as investors braced for a slew of U.S. economic data this week, especially consumer prices, to gauge the outlook for Federal Reserve monetary policy. Asian markets are trading mixed on Tuesday following a fluctuating session overnight in the US.

Back home, Indian equity benchmarks closed marginally lower on Monday as investors turned cautious after US-based Hindenburg Research raised allegations against capital market regulator Sebi's chairperson. Markets made a negative start as latest data released by the Reserve Bank of India (RBI) showed 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. According to the data, scheduled commercial banks’ credit rose by 13.88 per cent year-on-year (Y-o-Y) to Rs 163.8 trillion as on June 28. The deposit base of banks expanded by 10.64 per cent Y-o-Y to Rs 211.95 trillion. Traders overlooked the latest data from the Reserve Bank of India showing that India's foreign exchange reserves rose by $7.53 billion to a new record high of $674.91 billion for the week ended August 2. The total reserves increased on the back of a rise in foreign currency assets, which rose by $5.16 billion to $592.03 billion during the week. However, markets recovered all the early lost ground and traded higher during the afternoon trade amid positive trends in global equities and fresh foreign fund inflows. According to exchange data, Foreign Institutional Investors (FIIs) turned buyers on Friday after days of offloading equities. They bought equities worth Rs 406.72 crore. Traders took support with the Comptroller and Auditor General (CAG) stating that the central government was back on the path of fiscal consolidation in 2021-22, having ‘recovered ground’ from the pandemic year, and its ability to sustain debt improved. Sentiments remained upbeat as the Reserve Bank of India (RBI) in its latest report has showed that India’s outward foreign direct investment (OFDI) commitments surged 33.93% to $2915.16 million in July 2024 as against $2176.67 million in July 2023. Sequentially also, they rose from $2189.96 million in June 2024. Outbound FDI, expressed as a financial commitment, comprises three components: equity, loans, and guarantees. But, markets failed to hold gains and ended with minor cuts 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 August 12. Finally, the BSE Sensex fell 56.99 points or 0.07% to 79,648.92, and the CNX Nifty was down by 20.50 points or 0.08% points to 24,347.00.