Markets likely to get gap-up opening on firm global cues

Indian markets ended on a positive note and broke a two-day losing streak on Wednesday, mostly led by buying seen in the Information Technology stocks, while selling in other sectors trimmed the intraday gains. Markets remained remain closed on Thursday on account of Independence Day. Today, markets are likely to get gap-up opening supported by solid gains in global markets. Some optimism will come as Prime Minister Narendra Modi said the government is taking steps to transform India into a global manufacturing hub, and he called for improving the quality of products and services to attain international standards. Some support will come as Amitabh Kant, former CEO of NITI Aayog and G20 Sherpa, highlighted India’s rapid transformation into the third-best startup ecosystem globally, with 135 unicorns and over 1.4 lakh startups. However, there may be some cautiousness as data from the Commerce Ministry showed India's trade deficit widened to $23.50 billion on an annual basis in July from $19 billion in the same month last year. In June, the trade deficit was $20.98 billion. Merchandise exports in July this year dipped by 1.4 per cent year-on-year to $33.98 billion while imports rose by 7.5 per cent to $57.48 billion. Merchandise exports and imports stood at $34.39 billion and $53.49 billion in June 2023, respectively. There will be some buzz in pharma stocks after a report that India's medicine and antibiotics exports have started gaining significant market share in the US, with the Union government focusing on boosting domestic manufacturing of pharmaceutical products. According to the commerce ministry data, India is the third largest import source of 'medicine put up for retail sale' for the US. The top two are Ireland and Switzerland. Edible oil industry stocks will be in focus as industry body SEA said India's edible oil imports declined marginally by 1.6 per cent to 11.935 million tonnes in the first nine months of 2023-24 marketing year ending October. There will be some reaction in garments and apparel industry stocks as the Confederation of Indian Textile Industry (CITI) said India's textiles and apparel exports in July grew by 4.73 per cent to $ 2,937.56 million compared to the same month last year mainly driven by an increase in demand for apparels. Textiles and apparel exports stood at $ 2,805.01 million in July 2023.

The US markets ended higher on Thursday as investors were relieved by the encouraging consumer and labor data, which helped to ease down recession worries. Asian markets are trading in green on Friday tracking gains on Wall Street overnight.

Back home, Snapping two-day losing streak, Indian equity benchmarks traded in a narrow range throughout the day and ended the session with marginal gains on Wednesday, following a rally in IT and TECK stocks amid a surge in the US markets. After opening on a positive note, the markets oscillated between gains and losses for most part of the day, as market participants have entered the 'wait-and-watch' mode for CPI figures and retail sales data from the US, which will help firm bets on a rate cut by the US Federal Reserve and provide further market cues.  Traders remained cautious with a private report that the RBI is unlikely to consider softening rates this fiscal year even after the consumer inflation gauge declined below the mandated 4% target for the first time in five years, with street attributing the fall to a statistical base effect and might not indicate a durable victory against sticky prices just yet.  Some cautiousness also came with private report that India's trade deficit expanded to $23.50 billion in July, up from $19 billion a year earlier, Merchandise exports declined by 1.4% year-on-year to $33.98 billion, while imports increased by 5% to $56.18 billion. In June, exports had risen by 2.6% to $35.2 billion. Markets managed to keep their heads above water in afternoon session, after government data showed India's wholesale inflation, measured using the Wholesale Price Index, eased by 2.04 per cent on an annual basis in July as against a 16-month high of 3.36 per cent in June. Traders got support as India and the US have signed a ‘landmark’ agreement that provides a framework for both sides to explore cooperation in the micro, small and medium enterprises (MSME) sector. External Affairs Ministry Spokesperson Randhir Jaiswal said the Memorandum of Understanding (MoU) would enable MSMEs of the two countries to foster trade. But markets erased some gains and ended flat with positive bias as investors adopted a cautious stance due to weak domestic sentiment and the risks of earnings downgrades. Foreign fund outflows also weighed on domestic sentiments. On Tuesday, foreign institutional investors (FIIs) were net sellers of stocks to the tune of Rs 2,107.17 crore; thus far in August FIIs have net sold shares worth Rs 27,148.16 crore in the cash segment. Finally, the BSE Sensex rose 149.85 points or 0.19% to 79,105.88, and the CNX Nifty was up by 4.75 points or 0.02% points to 24,143.75.