Markets likely to get cautious start amid mixed global cues

Indian markets ended higher on Tuesday, marking their second straight day of gains following a rebound in the US markets and fresh foreign fund inflows. Today, markets are likely to get cautious start amid mixed global cues as investors globally are awaiting US consumer price index data that would provide more clarity about the quantum and frequency of interest rate cuts by the US central bank this year, apart from the debate between presidential contenders Kamala Harris and Donald Trump. There will be some cautiousness with a private report stating that India’s gross domestic product (GDP) growth to soften to 6.7% in FY25, below the Reserve Bank of India’s forecast of 7.2% and downside risks to its FY26 GDP forecast of 7.2% as growth signals are currently mixed. However, some encouragement may come later in the day as Fitch Ratings said India remains committed to reducing the budget deficit over the medium term, despite its focus on higher public capex and demands of the coalition government. In a report, it said India has achieved or outperformed its budget deficit targets in the last few years, thereby improving its fiscal credibility. Besides, External Affairs Minister S Jaishankar has said India is open to pursuing business with China, but the question is in what sector and under what terms. He was speaking in Berlin at Germany's annual ambassadors' conference. Oil sector stocks will be in focus after OPEC cut its forecast for global oil demand growth in 2024 reflecting data received so far this year and also trimmed its expectation for next year, marking the producer group's second consecutive downward revision. There will be some reaction in coal and power sector stocks as the government data showed that coal supply to the power sector in August dropped 5.4 per cent to 58.07 million tonnes (MT) as compared to the year-ago period. The supply of coal to the power sector was 61.43 MT in August of the previous fiscal year. Stocks related to EV will be in limelight as Union Minister Nitin Gadkari predicted that the Indian electric vehicle market potential is likely to touch Rs 20 trillion by 2030 across the entire EV ecosystem while hitting 10 million units annual sales. There will be some buzz in IT stocks with a private report that the Indian IT sector is forecasted to witness a robust double-digit Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR) of 17.5% from FY24 to FY27.

The US markets ended mostly higher on Tuesday after a volatile session, with traders eyeing consumer inflation data for clues on the Federal Reserve's next move. Asian markets are trading mixed on Wednesday amid growth concerns ahead of a key US inflation report and market reactions to the presidential debate.

Back home, Indian equity benchmarks stayed optimistic for major part of the trading session and ended around half a percent higher on Tuesday, marking their second straight day of gains, following a rebound in the US markets and fresh foreign fund inflows. Foreign Institutional Investors (FIIs) bought equities worth Rs 1,176.55 crore on Monday, according to exchange data.  Markets made a positive start but soon turned cautious as traders remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out later in the week. However, a sustainable up move was seen in the afternoon, as traders took support with private report stating that Indian consumer inflation probably held below the Reserve Bank of India's 4.0 per cent medium-term target for a second month in August thanks to a moderation in food price rises due to last year's high base. Sentiments remained upbeat, as the Goods and Services Tax (GST) Council in its 54th meeting has made various recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST. The GST rate on cancer drugs namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab is reduced from 12% to 5%. Traders took note of Union Minister of State for Ministry of Commerce and Industry Jitin Prasada’s statement that India is revising FTAs with South Korea, Malaysia and various other ASEAN countries to benefit the domestic industries. He also emphasised the importance of boosting exports, reducing import dependence and ensuring growth. Towards the end of the trading session, the indices pared-off some of gains but managed to close higher, buoyed by strong performances in Telecom, Utilities and Power stocks. Finally, the BSE Sensex rose 361.75 points or 0.44% to 81,921.29, and the CNX Nifty was up by 104.70 points or 0.42% to 25,041.10.