Markets likely to get positive start; GDP data eyed

Indian markets ended higher on Thursday, fueled by gains in financial and IT stocks. Also, gains in the shares of Reliance Industries (RIL) added some strength on the markets. Today, markets are likely to get positive start, following the release of strong GDP numbers in the US that calmed investors' nerves, which were jittery due to fears of a recession. Investors would have their eyes on the country's GDP and infrastructure output data, which were scheduled to be released later in today. Traders will be taking encouragement as Moody's raised India's growth projection for 2024 and 2025 citing signs of improving rural demand. Moody's now expects India's economy to expand 7.2 per cent in 2024 from 6.8 per cent previously, while growth for 2025 is pegged at 6.6 per cent versus 6.4 per cent. The agency noted that both industrial and services sectors have demonstrated strong performance, with the services PMI consistently above 60 since the start of the year. Some support will come as retail inflation rates for farm and rural workers eased to 6.17 per cent and 6.20 per cent, respectively, in July. The retail inflation rates for farm and rural workers were 7.02 per cent and 7.04 per cent, respectively, in June this year. Meanwhile, Fitch affirmed India's long-term foreign currency issuer rating at 'BBB-' with a stable outlook, citing a strong medium-term growth outlook. The agency said the growth outlook will continue to drive improvement in structural aspects of its credit profile, including India's share of GDP in the global economy as well as its solid external finance position. However, there may be some cautiousness with a private report that India's monsoon rains are likely to be prolonged into late September this year due to the development of a low-pressure system in the middle of the month. Above-normal rainfall due to the delayed withdrawal of the monsoon could damage India's summer-sown crops like rice, cotton, soybean, corn, and pulses, which are typically harvested from mid-September. There will be some buzz in sugar stocks as the government removed the cap on sugar diversion for ethanol production for ESY (Ethanol Supply Year - December to November) 2024-25. According to the government's notification, sugar mills and distilleries can produce ethanol from sugarcane juice/sugar syrup, B-Heavy molasses, as well as C-Heavy molasses, during ESY2024-25 as per their agreements with oil marketing companies. E-commerce stocks will be in focus as the Directorate General of Foreign Trade (DGFT) under the Commerce Ministry has announced plans to promote e-commerce export hubs (ECEH) in India. The hubs aim to aggregate fast-moving goods like textiles, handicrafts, and jewellery for export, leveraging strong sourcing networks, logistics, and warehousing support. There will be some reaction in tyre industry stocks as industry body Automotive Tyre Manufacturers Association (ATMA) said tyre exports from India grew 17 per cent year-on-year to reach Rs 6,219 crore in the first quarter of the current fiscal with the US emerging as the biggest market.

The US markets ended mostly lower on Thursday following robust U.S. economic data, while artificial intelligence chipmaker Nvidia dropped after its largely in-line forecast failed to impress investors. Asian markets are trading higher on Friday after economic data from the US calmed recessionary fears, while investors also assessed a slew of data from Japan.

Back home, Indian equity benchmarks clocked decent gains on Thursday due to buying in select heavyweights. The day started flat with a mixed response from Sensex and Nifty in the opening, as investors awaiting a slew of crucial economic data, including reports on U.S. personal income and spending in July, which includes readings on inflation said to be preferred by the US Fed. While the data is not likely to affect optimism the Fed will lower rates next month, it could impact expectations for how quickly the central bank cuts rates. For the most part of the session, indices were in green and also reached fresh record highs, as sentiments were positive, after the Department of Economic Affairs (DEA), Ministry of Finance, has amended the Securities Contracts Regulation Rules (SCRR), 1956 to ease the listing requirements for Indian companies seeking to list on international exchanges within IFSCs at par with global standards. Volatility hit the markets in the second half, as traders were cautious, after the National Council of Applied Economic Research (NCAER) in its Monthly Economic Review for August has said that the Indian economy has remained resilient but the outlook seems softer due to moderation in a couple of high-frequency indicators, amid global geo-political uncertainties. The report said bank credit growth of scheduled commercial banks (both food and non-food) moderated in June 2024. But, volatility was for the short period, as markets managed to end higher. The street took a note of Prime Minister Narendra Modi’s statement that the government will continue to build on the success of the Pradhan Mantri Jan Dhan Yojana (PMJDY) and initiate even more steps to build a Viksit Bharat. Finally, the BSE Sensex rose 349.05 points or 0.43% to 82,134.61, and the CNX Nifty was up by 99.60 points or 0.40% to 25,151.95.