Markets likely to get flat-to-positive start amid foreign fund inflows

Indian markets ended the week's first trading session at record high closing level, led by IT, FMCG and banking stocks. Today, markets are likely to get flat-to-positive start amid foreign fund inflows. As per NSE data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 1,735.46 crore. Sentiments will get a boost as S&P Global Ratings said credit quality and financial profile of Indian rated companies are expected to improve further on the back of declining leverage and broad-based earnings growth. It added the absolute debt reduced more in non-infrastructure sectors. Also, S&P Global Market Intelligence said India’s outlook remains positive despite the dip in growth in the first quarter of FY25 to 6.7 percent compared to 7.8 percent in the previous quarter. The global research firm retained India’s GDP output at 6.8 percent for FY25. Traders may take note of Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that India is well-positioned for strong global economic growth, but the country must be cautious of financialization as it progresses towards becoming a developed nation by 2047. Nageswaran highlighted the risks of an oversized financial market influencing public policy and economic outcomes, a trend that he believes India should avoid. Banks could be in focus on eve of the weekly expiry of the Nifty Financial Services index. There will be some buzz in coal industry stocks as the country's coal production rose by 6.48 per cent to 384.08 million tonne (MT) in the first five months of the ongoing fiscal. The production was 360.71 MT in April-August FY24. Stocks related to agriculture will be in limelight after the government gave the green light to seven major agricultural schemes, totaling around Rs 14,000 crore. This includes a Rs 2,817 crore Digital Agriculture Mission and a Rs 3,979 crore scheme dedicated to crop science. There will be some reaction in auto stocks as rating agency ICRA said the commercial vehicles (CV) wholesale volume may witness year-on-year growth of up to 3 per cent in current fiscal year. ICRA had earlier estimated 4-7 per cent decline in CV volume for FY25. Also, a private report indicated that electric vehicle (EV) sales increased by 22.8 per cent year-on-year with 156,199 vehicles sold in August. A total of 127,206 vehicles were sold in August 2023, reflecting a significant growth in EV adoption over the past year. Meanwhile, shares of Premier Energies IPO will be listed on the bourses today. Moreover, shares of Jay Bee Laminations, Vdeal System, and Indian Phosphate will be listed on NSE under the SME category today.

The US markets remained closed on Monday on account of Labor Day. Asian markets are trading mixed on Tuesday as investors digested South Korea’s inflation numbers for August that were at its lowest on a year-on-year (YoY) basis since March 2021.

Back home, Indian equity benchmarks ended Monday's trading session at record closing high levels, tracking foreign fund inflows and a rally in the US markets. According to exchange data, Foreign Institutional Investors (FIIs) bought equities worth Rs 5,318.14 crore on Friday. The markets began the week on a positive note and consolidated during the day, as traders took support with the RBI stating that India’s forex reserves jumped by $7.023 billion to touch a new high of $681.688 billion in the week ended August 23. Some support also came with Defence Minister Rajnath Singh stating that the Indian economy has now improved to Fabulous Five from the Fragile Five before 2014. The minister also added that the Indian economy is one of the fastest-growing large economies now. He also said the government has taken various steps to improve the ease of doing business in the country. Traders also took a note of the government data showing that fiscal deficit narrowed to 17.2 percent of the full year estimate in the first four months of the year, compared with 33.9 percent during similar period in the previous year, as spending remained contained due to elections. However, gains remained capped as some concern came with private-sector survey showing that India's manufacturing activity growth eased to a three-month low in August as demand softened significantly, casting another shadow over the otherwise robust economic outlook. The HSBC final India Manufacturing Purchasing Managers' Index, compiled by S&P Global, fell for a second month in August, dropping to 57.5 from July's 58.1 and below a preliminary estimate of 57.9. Some anxiety also came as a private report slashed FY25 GDP growth estimates for India to 6.7 percent, down from the previous of 6.9 percent, citing weaker Q2 and soft signals for Q3. The report’s GDP growth projections also stand much lower than the Reserve Bank of India's 7.2 percent forecast. But, markets managed to keep their heads above water throughout the day and ended marginally in green, taking support from the government data showing that Gross Goods and Services Tax (GST) collections in the month of August 2024 grew 10 per cent to about Rs 1.75 lakh crore. In July 2024, gross GST mop-up was Rs 1.82 lakh crore, while in August 2023 it was Rs 1.59 lakh crore. As per the data, gross GST revenues from domestic transactions grew 9.2 per cent to about Rs 1.25 lakh crore. Revenues from import of goods were up 12.1 per cent to Rs 49,976 crore. Finally, the BSE Sensex rose 194.07 points or 0.24% to 82,559.84, and the CNX Nifty was up by 42.80 points or 0.17% to 25,278.70.