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

Indian equity markets ended higher on Monday on account of buying in banking stocks namely HDFC bank and SBI. Today, markets are likely to make positive start on firm cues from the global markets. Foreign fund inflows likely to aid domestic sentiments. As per NSE data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 404.42 crore on Monday. Traders may get some encouragement as rating agency ICRA, in its latest report Southwest Monsoon 2024 - Update, asserted that above-normal monsoon rains that helped farmers sow more crops this Kharif season bode well for agriculture, and are likely to improve gross value addition (GVA) in the sector. It stated that the GVA growth of agriculture, forestry, and fishing will improve to 3.2 per cent in the current financial year 2024-25 from 1.4 per cent in 2023-24.  Meanwhile, ICRA said that business opportunities worth Rs 2 lakh crore are expected to open up for engineering, procurement, and construction (EPC) players over the next decade for the completion of four priority interlinking river (ILR) projects. It added around a third of these (about Rs 80,000 crore) are estimated to be awarded in the next four years for companies involved in the construction of large irrigation projects. Further, some support may come as private report said India’s aspiration to be a $7-trillion economy by the end of the decade can be achieved as a strong Prime Minister Narendra Modi rolls out the digital and physical infrastructure that’s drawing multinationals involved in manufacturing advanced products and services. Traders may take note of report that Commerce and Industry Minister Piyush Goyal sought investments from Australian pension funds in sectors such as renewable energy, manufacturing, education, fintech, and agritech. There may be some buzz in FMCG industry related stocks as private report said that the fast-moving consumer goods (FMCG) sector is poised for robust growth, driven primarily by a recovery in rural demand, which has begun to outpace urban consumption. 

On the global front, Asian markets are trading mostly in green in early deals on Tuesday as China announced a slew of policy easing measures in a rare briefing from central bank governor Pan Gongsheng. The PBOC will cut the reserve requirement ratio for banks by 50 basis points, although it did not provide a specific timeline. It also announced it would cut the seven-day reverse repurchase rate from 1.7% to 1.5%. The US markets ended higher on Monday as traders looked to build on last week’s gains following the Federal Reserve’s interest rate cut. 

Back home, rising for the third day in a row, Indian equity benchmarks scaled their new record closing high levels on Monday, helped by strong foreign fund inflows and a largely firm trend in Asian markets. Foreign Institutional Investors (FIIs) bought equities worth Rs 14,064.05 crore on Friday, according to exchange data. Markets opened with gains and traded with a positive bias for whole day as traders took 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. Besides, 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. Some support came as a labour ministry stated that 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.  Markets extended gains in second half of trading session, taking support from a private report stating 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. Traders overlooked report that a slowdown in business activity of both the manufacturing and services sector pulled down the expansion of India’s private sector economy in September, according to a survey by HSBC. According to the survey carried out by the global banker, the headline flash composite Purchasing Managers’ Index (PMI) figure declined to 59.3 in September, lowest in 2024, from an upward revised figure of 60.7 in August. Softer expansions were seen across both the manufacturing and services sectors. Finally, the BSE Sensex rose 384.30 points or 0.45% to 84,928.61, and the CNX Nifty was up by 148.10 points or 0.57% to 25,939.05.