Markets likely to get positive start on Monday

Indian markets ended higher on Friday as easing fears of a recession in the US triggered buying in IT shares amid a sharp global stocks rally. Today, markets are likely to get positive start tracking positive global cues and foreign fund inflows. The foreign institutional investors (FIIs) turned net buyers on August 16 as they bought equities worth Rs 766 crore. Some support will come as International Monetary Fund’s (IMF) deputy managing director Gita Gopinath said India should invest in creating a skilled workforce, putting in place a better infrastructure while undertaking land, labour and taxation reforms to meet its aspiration to become a developed country by 2047. Besides, a government survey showed that the unemployment rate in urban areas for individuals aged 15 years and above was 6.6 per cent in April - June 2024 (Q1 FY25), remaining unchanged from the first quarter of FY24. As per the Periodic Labour Force Survey, India's unemployment rate for the quarter ended on June 30 declined from Q4 FY24 when the rate stood at 6.7 per cent. Traders may take note of Saurabh Garg, secretary, ministry of statistics and programme implementation’s statement that India needs to align the sustainable development goals with its target of becoming a developed economy by 2047. The secretary noted that India’s coverage of SDG indicators had improved over the past five years, with the ministry tracking 95 percent of the indicators in 2024 compared with 55 percent in 2019. Moreover, Chief negotiators of India and Australia will begin the next round of talks for the comprehensive free trade agreement from tomorrow in Sydney, where both sides are likely to close negotiations on several chapters of the pact. Both countries have already implemented an interim pact and are in discussions to expand its scope under the CECA (Comprehensive Economic Cooperation Agreement). However, there may be some cautiousness as data released by the Reserve Bank of India showed that India’s foreign exchange reserves decreased by $4.8 billion, reaching $670.12 billion for the week ending August 9, falling from the previous all-time high. Forex reserves, as of August 2, had touched an all time high of $675 billion, reflecting a robust external sector performance. Stocks of construction equipment industry will be in focus as data released by the Indian Construction Equipment Manufacturers' Association (ICEMA) showed that India's construction equipment industry witnessed a 5 per cent rise in sales to 28,902 units during the April-June quarter of 2024-25. As per the data, the construction equipment (CE) industry had sold 27,577 units in the same period of the previous fiscal. FMGC stocks will be in focus with a private report that fast-moving consumer goods (FMCG) companies expect to sustain volume growth in the coming quarters, buoyed by recovery of demand in rural markets and good monsoon, despite concerns over growing food inflation. There will be some reaction in oil & gas and aviation sector stocks as the central government reduced the windfall tax on petroleum crude to Rs 2,100 per metric tonne, down from Rs 4,600 per tonne, effective August 17. Earlier, on July 31, the windfall tax on crude was cut by 34.2 per cent to Rs 4,600 per tonne. Additionally, there will be no windfall tax on the export of diesel and aviation turbine fuel (ATF). In primary market, Interarch Building Products Rs 600.29 crore share sale opens in the price range of Rs 850 – Rs 900 per share. 

The US markets ended higher on Friday as investors played down a recession risk on stronger than expected retail sales data. Asian markets are trading mixed on Monday after global equities enjoyed their best week in nine months on expectations the US economy would dodge a recession and cooling inflation would kick off a cycle of interest rate cuts.

Back home, Friday turned out to be a fabulous day of trade for Indian equity benchmarks, where frontline gauges garnered splendid gains, led by massive buying in index majors Tech Mahindra, Tata Motors and Mahindra & Mahindra. This uplift followed U.S. economic data that eased recession fears in the world's largest economy, contributing to a global market rally. Markets made a gap-up opening as traders took support with Prime Minister Narendra Modi’s statement that 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. However, markets lost some of their gains in the early hours but soon gained traction due to strong buying interest in select heavyweight stocks. Traders took encouragement 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. Markets extended gains in late afternoon deals and settled near day’s highs, as sentiments remained up-beat with a private report stating that the rural economy of India has emerged as a significant driver of economic growth, outpacing urban areas largely due to increased government spending in the recent quarters. Traders took note of report that India, the world's third largest oil consuming and importing nation, in July bought $ 2.8 billion worth of crude oil from Russia, second only to China, which remains the largest importer of Russian oil. Traders overlooked the commerce ministry’s data showing that India's merchandise export dipped 1.2 per cent to $33.98 billion in July 2024 from $34.39 billion in the year-ago month. Imports increased by about 7.45 per cent to $57.48 billion in July 2024 against $53.49 billion a year ago due to a jump in the inbound shipments of crude oil, silver and electronic goods. The trade deficit, or the gap between imports and exports, during the month under review stood at $23.5 billion. Finally, the BSE Sensex rose 1330.96 points or 1.68% to 80,436.84, and the CNX Nifty was up by 397.40 points or 1.65% to 24,541.15.