Markets likely to get gap-up opening on strong cues from Wall Street overnight

Indian markets ended a choppy session in negative territory on Wednesday, dragged by negative global sentiments, and selling across sectors. Today, markets are likely to get gap-up opening following a strong overnight showing on Wall Street as well as firm trade in Asian counterparts. Domestic investors will be eyeing the release of India's Index of Industrial Production (IIP) for July and Consumer Price Index (CPI) or retail inflation data for August to be out later in the day. These data points will provide important cues for the market's trajectory, especially amid concerns about global economic headwinds. Foreign fund inflows likely to aid domestic sentiments. As per NSE data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 1,755 crore. Some support will come as Finance Minister Nirmala Sitharaman said the Union government is implementing various schemes to encourage the growth and development of MSME (Micro, Small and Medium Enterprises) sector across the country. She said these schemes include areas of credit support, formalization, technological assistance, infrastructure development, skill development and training and market assistance for the MSMEs. Traders may take note of the Union Minister of Petroleum and Natural Gas, Hardeep Singh Puri’s statement that India has a natural advantage in producing Green Hydrogen due to the low cost and abundance of solar energy and investments in the power grid. He added India is poised to lead the global green energy demand and the rising domestic demand across diverse sectors. Meanwhile, the government has proposed an amendment to the Securities Contracts Regulation Act (SCRA) to give brokers more flexibility in using their surplus cash. Currently, Rule 8 of the SCRA prohibits brokers from engaging in any business other than securities or commodity derivatives. Stocks related to electronic will be in focus after Prime Minister Narendra Modi set a goal to grow the country's electronics sector to $500 billion by the end of the decade. Modi emphasized India’s strengths in areas like semiconductors. Currently, the nation’s electronics market is valued at approximately $155 billion. There will be some reaction in auto and auto ancillary sector stocks after Union Minister for Electronics and Information Technology announced that the central government will soon unveil the Semicon 2.0 program, having a much-expanded scope than the previous programme. Metal stocks will be in limelight as an Indian finance ministry order showed that India will impose tariffs of between 12% and 30% on some steel products imported from China and Vietnam in a bid to safeguard and boost local industry. Welded stainless steel pipes and tubes exported by China, the world's largest producer of steel, and Vietnam, will be taxed for the next five years.

The US markets ended higher on Wednesday as a key inflation report cemented expectations that the US Federal Reserve will issue a 25-basis point rate cut next week. Asian markets are trading in green on Thursday following the overnight gains on Wall Street after a volatile session spurred by inflation data in the country.

Back home, after two days of gains, Indian equity benchmarks ended lower by around half percent on Wednesday amid a volatile trading session, led down by selling in Oil & Gas, Energy and PSU stocks coupled with weakness across Asian markets. After making a cautious start, key gauges managed to keep their heads above water in first half of trading session, as traders took support with Fitch Ratings’ statement that 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. Some support also came as exchange data showed Foreign Institutional Investors (FIIs) bought equities worth Rs 2,208.23 crore on Tuesday. 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. However, key indices failed to hold gains and slipped into red in late afternoon deals, as investors braced for the release of the US CPI data later today. Traders also remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out tomorrow. Some concern came 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. On the sectoral front, there was some reaction in coal and power 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. IT stocks also were in watch 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. Finally, the BSE Sensex fell 398.13 points or 0.49% to 81,523.16, and the CNX Nifty was down by 122.65 points or 0.49% to 24,918.45.