Markets likely to get negative start amid weakness in global peers

Indian markets ended the week's first trading session on a higher note following gains in global peers after the US Fed signalled a rate cut in September. Today, markets are likely to get negative start amid weakness in global peers. Also, continued rise in crude oil prices overnight after Israel and Hezbollah traded strikes over the weekend may dampen sentiments in the markets. There will be some cautiousness as a report by SBI Research, released just days before the government is set to publish the official data, stated that the Indian economy is expected to grow at 7.0-7.1 per cent in the April-June period, the first quarter of 2024-25. However, this growth forecast comes with a downward bias. The first quarter GDP data is scheduled for release on Friday. Traders will be concerned with a private report stating that the newly-announced Unified Pension Scheme (UPS) is expected to shoot up the fiscal deficit by 15 basis points (bps) to 5.1 per cent from the budgeted 4.9 per cent in the financial year 2025 (FY25). However, some support may come later in the day amid foreign fund inflows. The foreign institutional investors (FIIs) extended their buying as they bought equities worth Rs 483 crore on August 26. Meanwhile, India and Singapore pledged to further enhance co-operation in the emerging and futuristic areas. There will be some buzz in metal & mining sector stocks as ratings agency ICRA has forecast a challenge for the domestic steel industry due to the new mining cess by some states, following the recent Supreme Court ruling empowering states to levy taxes on mineral rights and mineral-bearing land. ICRA stated that the development is likely to compress operating margins across the sector, affecting both primary and secondary steel producers. Small finance banking stocks will be in focus as Crisil Ratings said Small Finance Banks' (SFBs) loan growth will moderate to 25-27 per cent in FY25 against 28 per cent in FY24. It added though a tad lower, the advances growth will be robust and driven by factors like segmental and geographical expansion by the entities. There will be some reaction in edible oil industry stocks after the Solvent Extractors Association of India (SEA) made a fresh appeal to the government to reconsider its decision to extend the ban on de-oiled rice bran exports until January 31, 2025. The industry body argues that the continued restriction is causing severe underutilisation of processing plants, particularly in eastern India.

The US markets ended mostly lower on Monday with AI heavyweight Nvidia dipping ahead of its quarterly report this week, while investors awaited inflation data for clues about the path of interest-rate cuts by the Federal Reserve. Asian markets are trading in red on Tuesday as traders look toward China’s year-to-date industrial profits as of July.

Back home, Indian equity benchmarks ended on a strong note on Monday, buoyed by positive global cues amid renewed hopes that the US Federal Reserve will start cutting interest rates soon. Foreign fund inflows also drove the markets higher.  As per exchange data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 1,944.48 crore on August 23, 2024.  Likewise, the DII's were net buyers of equities worth Rs 2,896.02 crore. Markets kicked off week's trading session on a positive note and continued to trade higher throughout the day as traders took support with EEPC stating that despite a challenging global environment, India's engineering goods exports continued their upward trajectory in July with a 3.6 per cent year-on-year growth, reflecting the sector's resilience. The Engineering Export Promotion body EEPC India chairman Arun Kumar Garodia said the engineering goods exports were $9.04 billion in July 2024, compared to $8.72 billion a year ago month. Some support also came as the latest data from the Reserve Bank of India showed India’s foreign exchange reserves rose by $4.54 billion to $674.66 billion in the week ended August 16. The total reserves increased on the back of a rise in foreign currency assets, which grew by $3.6 billion during the week. Markets continued to trade higher in late noon deals, taking support from Union Commerce and Industry Minister, Piyush Goyal’s statement that an MSME should not be looked upon as merely a small enterprise, its thinking should not be small or negative since MSMEs are a big force, they are successful, they are the strength of the nation, are giving employment to millions of countrymen and contribute to nation building. Traders overlooked an analysis of the latest quarterly Periodic Labour Force Survey (PLFS) showing that the jobless rate for women in urban areas worsened during the first quarter (April-June) this financial year, showing the increased barriers for women looking for work. The data shows the women unemployment rate increased in urban areas to 9 per cent in April-June (Q1) from 8.5 per cent in the preceding quarter. Traders also paid no heed towards private report stating that India's economic growth likely moderated and grew at its slowest pace in a year in the April-June quarter due to lower government spending amid a national election that concluded in June. In the April-June quarter, gross domestic product (GDP) was forecast to have grown an annual 6.9%, down from 7.8% in the preceding quarter. Finally, the BSE Sensex rose 611.90 points or 0.75% to 81,698.11, and the CNX Nifty was up by 187.45 points or 0.76% to 25,010.60.