Benchmark indices likely to get flat-to-positive start

Indian markets -- Sensex and Nifty -- closed flat after a volatile session on Tuesday, driven by profit-taking and escalating geopolitical tensions. Today, benchmark indices are likely to get flat-to-positive start tracking overnight gains on Wall Street. Markets are optimistic about the US Fed policy rate cut following Jerome Powell's supportive comments and the Federal Reserve’s confidence in achieving its 2% inflation target. Further, on the domestic front, buying by FIIs over the last three days added to the sentiments. Foreign institutional investors (FIIs) purchased shares worth Rs 1,503.76 crore on August 27. Sentiments will get boost as Moody's said over the last ten years, the government has escalated its capital spending on infrastructure from Rs 1.97 trillion (1.6 per cent of GDP) in FY2014-15 to Rs 11.1 trillion (3.4 per cent of GDP) in FY2024-25. This leap reflects a broader strategy to enhance physical and digital infrastructure, supporting an average annual GDP growth rate of 6 per cent and encouraging private sector participation through public-private partnerships (PPPs). Some support will come as the agriculture ministry said paddy acreage increased by 4.29 per cent to 39.42 million hectare so far in the ongoing 2024-25 kharif (summer) season. In the year-ago period, the area under paddy was 37.8 million hectare. Traders may take note of Indian Ambassador to Oman Amit Narang stating that discussions for the proposed free trade agreement (FTA) between India and Oman are at an advanced stage and both sides hope to conclude the pact early. He said the pact will give a significant push to bilateral trade and investment ties between the two countries. Meanwhile, the National Stock Exchange (NSE) of India is making a fresh attempt to launch IPO. The company has filed a no-objection certificate (NOC) with capital market regulator Securities and Exchange Board of India (SEBI). There will be some buzz in real estate sector stocks as a private report stated that the Indian residential real estate market attained its highest-ever performance in FY24, registering a 20.1% year-on-year (YoY) surge in absorbed area. This robust demand was accompanied by an 11.5% YoY rise in supply, yet inventory levels in key cities plummeted to a record low of 12 months, steered by sustained demand. Coal sector stocks will be in focus with report that the country's coal production rose by 7.12 per cent to 370.67 million tonne from April to August 25. Coal production was 346.02 MT in the year-ago period. Road EPC company’s stocks will be in limelight as a study of 120 road EPC companies rated by CRISIL Ratings showed that revenue growth of road engineering, procurement, and construction (EPC) companies is expected to moderate to 5 to 7 per cent by FY26 amid lower national highway awarding. Moreover, Orient Technologies is set to debut on the Mainboard, while Ideal Technoplast Industries and QVC Exports will make their entries on the SME platform.

The US markets ended higher on Tuesday rose slightly on Tuesday as investors looked ahead to some major earnings report later this week. Asian markets are trading lower on Wednesday ahead of the earnings from Nvidia, while Australian stocks also took a hit amid a sticky inflation print.

Back home, Indian equity benchmarks, despite trading mostly in green, ended flat on Tuesday due to the emergence of profit-taking amid rising geopolitical tensions in the Middle East and Ukraine. After making slightly positive start, key gauges turned volatile as traders got cautious with a report by SBI Research, released just days before the government is set to publish the official data, stating 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. This growth forecast comes with a downward bias. Some concern also came 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, markets managed to keep their heads above water in afternoon deals, amid foreign fund inflows. The foreign institutional investors (FIIs) extended their buying as they bought equities worth Rs 483 crore on August 26. Traders took some support with Crisil Ratings’ report stating that small finance banks (SFBs) are expected to grow their loan book by a robust 25-27 per cent this fiscal year (FY25). It stated that growth will be sustained by segmental and geographic expansion supported by a robust and growing presence in semi-urban and rural markets with significant unmet demand. But, markets failed to hold gains and ended flat as some pessimism remained among traders as India Ratings and Research’s (Ind-Ra) report highlighting increasing borrower leverage as a key concern for the microfinance (MFI) segment. Post the COVID-19 pandemic and implementation of harmonisation guidelines including the removal of interest rate caps, the ease of funding from banks to non-banks, along with a growing need for priority sector loans led to substantial growth in disbursement by existing MFI lenders in FY24. This, coupled with the advent of technology has improved the reach of credit to the bottom of the pyramid post pandemic, also raising a concern on the adherence on accessing repayment capability of the MFI borrower. Finally, the BSE Sensex rose 13.65 points or 0.02% to 81,711.76, and the CNX Nifty was up by 7.15 points or 0.03% to 25,017.75.