Markets likely to get a gap-down opening amid global selloff

Indian markets ended flat on Tuesday due to profit-taking in metal, oil and IT shares amid weak global trends. Today, markets are likely to get a gap-down opening, after global markets saw a sharp selloff following weak manufacturing data in the US that brought back fears of a recession in the US economy. Also, investors look ahead to the release of all-important U.S. jobs data on Friday for potential clues to Federal Reserve rate cuts. However, overall losses may remain capped somewhat as oil prices slumped about 5 percent in the U.S. trading session overnight on growth worries. Some optimism may come as the government data showed that foreign direct investment in India jumped 47.8 per cent to $ 16.17 billion in April-June this fiscal on healthy inflows in services, computer, telecom and pharma sectors. FDI inflows were at $ 10.94 billion in April-June 2023-24. Besides, S&P Global Market Intelligence asserted that despite the slowdown in growth in the first quarter of 2024-25, India’s underlying economic conditions remain positive. S&P Global Market Intelligence kept India’s real GDP growth forecast unchanged at 6.8 per cent for the entire year 2024-25. Traders may take note of External Affairs Minister S Jaishankar’s statement that ties between India and Singapore have become 'extremely strong' in the last two decades, and that the time is ripe for India and Singapore to take their bilateral relationship to the next level. There will be some buzz in the banking stocks with the latest data by the Reserve Bank of India (RBI) showing that the liquidity in the banking system improved to a one-month high surplus of Rs 2.23 trillion on Monday. This came about on the back of government spending. Auto stocks will be in focus with a private report that the domestic passenger vehicle industry volumes declined by low single digit in August 2024 as compared with August 2023, because of weak retail demand trends and higher inventory levels at the dealerships. There will be some reaction in retail and quick commerce company’s stocks with a private report that in a move that promises to redefine the Indian retail landscape, quick commerce companies are expected to drive their gross order value to $10 billion by FY26. This sector, marked by ultra-fast delivery and efficient last-mile operations, is rapidly disrupting the traditional food and grocery market in India, which is dominated by local small vendors controlling over 95 per cent of the $600 billion market. Meanwhile, the shares of Ecos (India) Mobility & Hospitality will be listed on the bourses on September 4. The company has been providing chauffeured car rentals (CCR) and employee transportation services (ETS) to corporate customers for more than 25 years.

The US markets ended lower on Tuesday with the major averages posting their worst declines since August 5, as weak manufacturing data added to concerns that the U.S. economy could be headed to a recession. Asian markets are trading mostly in red on Wednesday after US tech stocks sold off and weak US economic data sparked recession fears.

Back home, Indian equity benchmarks took a breather after a record rally and ended on a flat note on Tuesday, marred by subdued sentiment and a lack of major triggers. Markets remained rangebound and in the red for most part of the day, as investors awaited crucial economic data from the US which would impact the Federal Reserve rate cut in September. Traders got anxious with Chief Economic Advisor (CEA) V Anantha Nageswaran stating 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. Some cautiousness came as Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve. Acharya said after the Covid-19 pandemic, rural consumption and investments have weakened. However, downside remained capped as traders took some support after the World Bank in its latest India Development Update: India’s Trade Opportunities in a Changing Global Context stated that the Indian economy continues to grow at a healthy pace despite challenging global conditions. According to the World Bank, the growth is forecast to reach 7 percent in FY24/25 and remain strong in FY25/26 and FY26/27. Some support also came with S&P Global Ratings’ statement that 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. Finally, the BSE Sensex fell 4.40 points or 0.01% to 82,555.44, and the CNX Nifty was up by 1.15 points to 25,279.85.