Markets likely to get negative start amid mixed macro-economic data

Indian markets ended lower on Tuesday with cut of over a percent each due to heavy selling in banking, power and auto shares and sluggish global trends. Today, markets are likely to get negative start tracking weakness in global peers as well as higher inflation in the country. Retail inflation breached the Reserve Bank’s upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices. Inflation based on the consumer price index (CPI) was 5.49 per cent in September and 4.87 per cent in the year-ago month. Sustained foreign fund outflows likely to dent sentiments. The foreign institutional investors (FIIs) extended their selling on November 12 as they offload equities more than Rs 3000 crore. However, some respite may come later in the day as India’s industrial production expanded by 3.1 per cent in September after recording a contraction in the preceding month, as all three major segments - mining, manufacturing and power generation - showed improvement. Some support may come as India Exim Bank said led by sustained momentum in economic activity and improving demand prospects in trading partners supported by expected global monetary easing, India’s merchandise exports are likely to grow 1.85% year-on-year to $107.5 billion in the third quarter of FY25.  Traders may take note of Union Minister for Petroleum and Natural Gas Hardeep Singh Puri’s statement that the country could save Rs 91,000 crore on the import bill through biofuel blending and this money could be utilized for the benefit of the agricultural sector. There will be some buzz in banking stocks as the finance ministry said public sector banks (PSBs) have shown robust performance in the first half of the current fiscal year with a 26 per cent growth in net profit, increase in business and decline in non-performing assets (NPAs). The aggregate business of 12 PSBs stood at Rs 236.04 lakh crore during the April-September period, registering an 11 per cent year-on-year (YoY) growth. IT stocks will be in focus with a private report that information technology (IT) related spending in India is projected to reach a total of $160 billion in 2025, an increase of 11.2 per cent from 2024, fueled by expansion in both application and infrastructure software markets. Meanwhile, Eicher Motors, Alkem Laboratories, Apollo Tyres, Vodafone Idea, Brigade Enterprises, Godrej Industries, Garden Reach Shipbuilders & Engineers, Happiest Minds Technologies, Kalyan Jewellers India, NBCC India, PI Industries, and others will release quarterly earnings today.

The US markets ended lower on Tuesday as investors booked some profits from a post-election rally and waited anxiously for U.S. inflation data due this week. Asian markets are trading mixed on Wednesday, tracking losses on Wall Street as the U.S. postelection rally stalled overnight.

Back home, Indian equity benchmarks ended lower by over a percent on Tuesday due to widespread selling pressure amid sluggish global trends. Markets opened on a positive note as traders took support with government data showing that net direct tax collection grew 15.41 per cent to Rs 12.11 lakh crore between April 1 and November 10. This includes net corporate tax of Rs 5.10 lakh crore and non-corporate taxes (including taxes paid by individuals, HUFs, firms) of Rs 6.62 lakh crore. Other taxes (which include Equalisation Levy and gift tax) worth Rs 35,923 crore were mopped up. Traders took support as Union Minister Hardeep Singh Puri highlighted that India is moving towards a gas-based economy from the imported crude-based economy for its energy requirements. The minister stated that in recent years the government has taken transformative steps to increase domestic gas production and reduce India’s reliance on imports. Currently, India imports about 50 per cent of its natural gas needs, but with new investments in the upstream sector, this dependence is expected to come down over time. But key gauges were unable to maintain momentum and turned volatile in late morning deals amid unabated foreign fund outflows. As per NSE data, Foreign Institutional Investors (FII) were net sellers of Indian equities worth Rs 2,306.88 crore on November 11. Markets fell sharply in second half of trading session to settle near day’s low levels as earnings disappointments, demand concerns, and weak performances across sectors led to sharp declines. Investors overlooked report that with an aim to further enhance the ease of doing business in India, the Reserve Bank of India (RBI) has relaxed norms by finalizing an operational framework for reclassification of Foreign Portfolio Investment made by foreign portfolio investors (FPIs) to Foreign Direct Investment (FDI) under Foreign Exchange Management (Non-debt Instruments) Rules, 2019, when they exceed the 10% ownership limit in an Indian company. Finally, the BSE Sensex fell 820.97 points or 1.03% to 78,675.18, and the CNX Nifty was down by 257.85 points or 1.07% to 23,883.45.