Markets likely to get positive start as oil prices continued to fall

Indian markets ended a choppy session slightly higher on Wednesday, amid unabated outflow of foreign capital. Today, markets are likely to get positive start as oil prices continued to fall on demand concerns and minutes from the most recent Federal Reserve meeting hinted at potential rate cuts amid signs of easing inflation and a rising unemployment rate. Some support will come as Commerce & Industry Minister Piyush Goyal has said India and Africa should target doubling two-way trade to $200 billion in seven years and try and include more African countries in the partnership so that its full potential is reached. However, foreign fund outflows likely to dent sentiments. As per NSE data, Foreign Institutional Investors (FII) were net sellers of Indian equities worth Rs 799.74 crore. Some cautiousness may come as an analysis by S&P Global Market Intelligence showed that dividend growth at some of India's largest banks is expected to slow after surging in the fiscal year ended March 31. It said the anticipated slowdown comes as the rising cost of deposits and heightened competition for customer savings puts pressure on bank marginsand profits. There will be some buzz in jewellery sector stocks as Gem and Jewellery Export Promotion Council (GJEPC) said the overall gem and jewellery exports witnessed a 21.93 per cent year-on-year decline in July to $ 1,665.4 million (Rs 13,922.03 crore) on account of dampening of consumer demand following global unrest. Auto stocks will be in focus as a report by Federation of Automobile Dealers Associations (Fada) showed that passenger vehicle (PV) sales have slumped, resulting in an unprecedented inventory of over 700,000 units worth Rs 73,000 crore at dealerships nationwide. The stockpile has increased from 65-67 days in early July to 70-75 days, prompting concerns about dealer sustainability. There will be some reaction in metal stocks with a private report that India continued to be a net importer of steel during the first four months of the current fiscal year beginning April, with China as its biggest supplier of the alloy. As per the report, India imported 2.69 million metric tons of steel between April and July, and exported 1.57 million tons. NBFCs stocks will be in limelight as a report by ICRA noted that Non-Banking Financial Companies (NBFCs) are expected to face challenges related to funding availability, which could slow their growth compared to the strong expansion seen in the past two financial years. It added the growth of NBFCs' assets under management (AUM) is expected to moderate to 13 per cent -15 per cent in the current financial year, down from 18 per cent in the previous financial year.

The US markets ended higher on Wednesday after a summary of the Federal Reserve’s policy meeting last month reinforced hope for lower rates in the near term. Asian markets are trading mostly in red on Thursday as investors reviewed flash business activity data from Australia and Japan. The Bank of Korea kept its benchmark interest rate at 3.5 per cent, as anticipated, with attention now on its upcoming statements for potential hints on policy easing.

Back home, Indian equity benchmarks managed to end volatile session in green terrain on Wednesday, helped by gains in Consumer Durables, FMCG and Healthcare stocks. Markets opened on a negative note and consolidated during most part of the day amid continuous foreign fund outflows. According to exchange data, Foreign Institutional Investors (FIIs) again turned sellers on Tuesday as they offloaded equities worth Rs 1,457.96 crore. Traders took a note of Reserve Bank of India Governor Shaktikanta Das’ statement that India’s inflation must show signs of settling around the central bank’s target of 4 percent on a sustainable basis before a rate cut can be considered. The inflation rate in July eased below the RBI’s target for the first time since 2019, but the central bank expects it to climb back again from September. However, markets saw selective buying in the final hour and ended with marginal gains as traders took some support with the Labour Ministry’s statement that retirement fund body EPFO has registered a net addition of 19.29 lakh members in June 2024. The ministry stated that a year-over-year analysis showed a 7.86 per cent growth in net member additions compared to June 2023. It noted this surge in membership can be attributed to numerous factors, including increased employment opportunities, a growing awareness of employee benefits, and the effectiveness of EPFO’s outreach programmes. Some support also came as Krishnamurthy V Subramanian, executive director, International Monetary Fund (IMF) stated that Indian economy is slated to grow to $55 trillion by 2047, if the country is able to register an average real growth rate of 8 per cent in the coming years with average inflation remaining around 5 per cent. But, cautious trend in global equities ahead of the release of US Fed minutes restricted the gains in domestic markets. Finally, the BSE Sensex jumped 102.44 points or 0.13% to 80,905.30, and the CNX Nifty was up by 71.35 points or 0.29% to 24,770.20.