Markets likely to get optimistic start tracking positive trend in Asian counterparts

Indian markets -- Sensex and Nifty -- soared to all-time highs on Friday, fueled by robust gains across the auto, energy, and banking sectors. Today, markets are likely to get optimistic start tracking positive trend in Asian counterparts. Foreign fund inflows likely to aid domestic sentiments. As per NSE data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 14,064.05 crore. Foreign investors have injected close to Rs 33,700 crore in domestic equities in this month so far primarily due to interest rate cut in the US and resilience of the Indian market. This also marks the second highest inflow in a month in this year so far, the last one being in March, when Foreign Portfolio Investors (FPIs) infused Rs 35,100 crore, data with the depositories showed. Traders will be taking encouragement with a latest report by the Reserve Bank of India (RBI) showing that India's net foreign direct investment (FDI) during the April-July period of the current financial year (FY25) rose to $5.5 billion compared to $3.8 billion in the year-ago period. The increase was due to an improvement in gross inward FDI, which grew by 23.6 per cent year-on-year (Y-o-Y) to $27.7 billion during the four months of FY25. Some support will come as the Reserve Bank data showed that India’s forex reserves rose by $223 million to a new all-time high of $689.458 billion for the week ended on September 13. The overall forex kitty had jumped by $5.248 billion to a high of $689.235 billion for the previous reporting week ended on September 6. Traders may take note of a private report that India continues to be a bright spot in an otherwise gloomy global outlook and the country could clock a 7 per cent growth in the current fiscal despite the headwinds. Besides, retail inflation for farm workers and rural labourers eased to 5.96 per cent and 6.08 per cent, respectively, in August against the comparative figures of 6.17 per cent and 6.20 per cent recorded in July this year. However, there may be some cautiousness as the latest Bulletin of the Reserve Bank showed that food price volatility remains a contingent risk even as the overall retail inflation has remained below the target of 4 per cent for the second consecutive month in August. The Bulletin also said that global economic activity is slowing down while the pace of disinflation remains sluggish, provoking caution among monetary policy authorities. Auto stocks will be in focus as ratings agency ICRA said the competition between strong hybrid cars and electric vehicles (EVs) is expected to remain stiff, and each of them could have an eight per cent volume share in the Indian domestic passenger vehicle market by 2027–28. In 2023-24, strong hybrid cars and EVs each had a two per cent share in the domestic passenger market. There will be some reaction in metal stocks as India has proposed the imposition of retaliatory customs duties, under the WTO norms, on certain value of goods imported from the EU, as the two sides have failed to reach a consensus on the European Union's safeguard measures on some steel products. Investors will be eyeing HSBC's composite, manufacturing, and service Purchasing Managers' Index (PMI) data for September will be released today. Meanwhile, Manba Finance IPO's subscription window opens today. It is a book built issue of Rs 150.84 crore with an entirely fresh issue of 12.6 crore shares.

The US markets ended mostly in red on Friday as investors digested the Federal Reserve's 50-basis-point cut midweek that started a rate reducing cycle. Asian markets are trading mostly higher on Monday ahead of central bank meetings that are widely expected to deliver two more rate cuts and key US inflation figures that should flash a green light for more easing there.

Back home, Indian equity benchmarks witnessed an excellent up-move on Friday, with Sensex closing above the historic 84,000-mark for first time while Nifty settling at a new record closing high, powered by a rally in Realty, Capital Goods and Auto stocks along with upbeat trends in the U.S. and Asian markets. Markets opened on a positive note and showed sustainable upside in the early to mid-part of the session, as traders took encouragement with a report by S&P Global stating that India is set to become the third largest economy and transition to the upper-middle-income category by 2030-31, driven by a projected annual growth rate of 6.7 per cent this fiscal. India posted GDP growth of 8.2 per cent in FY2024, exceeding the government’s earlier estimate of 7.3 per cent, sustained reforms are crucial for India’s economic momentum to continue. Some support also came with Economic Affairs Secretary Ajay Seth’s statement that the Fed rate cut would not have a significant impact on foreign inflows into India. Sentiments remained up-beat with Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi’s statement that India and South Korea have started sharing the bill of lading in an electronic transfer mode between the customs of both sides, a move that will help promote ease of doing business. Some optimism came with Petroleum Minister Hardeep Singh Puri’s statement that the United States is India's sixth largest energy trade partner and the growing bilateral trade has the potential to cross the $500 billion-mark from $200 billion at present. However, volatility struck the bourses in late afternoon deals as key gauges erased most of their gains to come off day’s highs, as traders turned cautious with exchange data showing that Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,547.53 crore on Thursday. But, in final minutes of trade, markets regained traction and ended at record high levels. Finally, the BSE Sensex rose 1359.51 points or 1.63% to 84,544.31, and the CNX Nifty was up by 375.15 points or 1.48% to 25,790.95.