Markets likely to get positive start amid overnight fall in crude oil prices

Indian markets followed the global trend and ended in red on Wednesday with Nifty breaking its 14-day winning streak amid selling across the sectors barring realty, FMCG, and pharma. Today, markets are likely to get positive start amid overnight fall in crude oil prices on pessimism about demand in the coming months as crude producers offered mixed signals about supply increases. Also, rebound in Asian peers from the sell-off on Wednesday also likely to aid domestic sentiments. Some support will come as NITI Aayog CEO B.V.R. Subrahmanyam said the Free Trade Agreement (FTA) being negotiated between India and the UK is in the final stages with both sides within finger-touching distance to clinch an agreement. The FTA, negotiations for which were launched in January 2022 before being stalled due to general elections in both countries, is aimed at significantly enhancing the estimated GBP 38.1 billion a year bilateral trading partnership. Besides, the finance ministry has relaxed norms for expenditure exceeding Rs 500 crore to accelerate capex (capital expenditure) that is pegged at Rs 11.11 lakh crore for the current fiscal. This will give a push to government spending which suffered a slowdown for a couple of months due to general elections. Traders may take note of Telecom Secretary Neeraj Mittal’s statement that after 5G, India is now gearing up for 6G rollout which will spur the growth that is required to achieve the developed nation status. Mittal said that the government has replaced 150 years old Telegraph Act with a new Telecommunications Act which is expected to stand the test of time for the next 20-30 years. However, muted sentiment from global markets could likely weigh on sentiment among investors. Paper industry stocks will be in limelight as a report by Indian Paper Manufacturers Association (IPMA) for 2023-24 noted that India remains the fastest-growing paper market in the world with domestic consumption of packaging paper and paperboard growing at 8.2 per cent in 2023-24. It added packaging paper & paperboard market is growing at an annual rate of 8.2 per cent in the country. There will be some reaction in ancillary company’s stocks as a private report forecasted a bumpy near-term outlook for ancillary companies with wholesale passenger vehicle (PV) sales declining for a second consecutive month in August.

The US markets ended mostly in red on Wednesday following labor market data and comments from a Federal Reserve official that bolster the case for an interest rate cut. Asian markets are trading mostly in green on Thursday as traders awaited this week’s US payrolls data to gauge the extent of the Federal Reserve’s easing.

Back home, Indian equity benchmarks erased most of their initial losses but ended lower on Wednesday following a decline in Asian markets driven by concerns over US economic growth. Markets made a gap down opening and remained in red for whole day, as traders got cautious with Credit rating agency ICRA’s report stating that the increasing delinquencies in the microfinance sector, which is likely to push up the Non-banking finance companies - microfinance institutions (NBFC-MFI) credit costs to 320-340 bps in FY2025 from 220 bps in FY2024. The evolving asset quality risks will dampen sectoral growth and earnings in the current fiscal. ICRA expects NBFC-MFIs’ AUM growth to dip to 17-19% in FY2025 from 29% in FY2024. Some concern came as a private report stated that despite robust macro-economic growth, India grapples with micro unpredictability due to technology among others. However, selective buying in heavyweight stocks helped trim the losses towards the end. Traders took some support with report that India's services sector experienced its fastest growth in five months this August, driven by resilient demand and easing inflationary pressures, according to HSBC India Services Purchasing Managers' Index (PMI), compiled by S&P Global. India's PMI climbed to 60.9 in August, up from July's 60.3, surpassing the preliminary estimate of 60.4. Some support also came with the government data showing 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. Traders took 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. But, markets failed to erase all the losses and ended marginally lower. Finally, the BSE Sensex fell 202.80 points or 0.25% to 82,352.64, and the CNX Nifty was down by 81.15 points or 0.32% to 25,198.70.