Domestic indices likely to make cautious start on Wednesday

Indian markets ended marginally lower on Tuesday dragged mainly by banking, financials and metal stocks. Today, the markets are likely to make cautious start amid mixed global cues coupled with concerns over economic growth. There will be some cautiousness as the World Bank slashed India's GDP forecast to 8.3 per cent for FY22, the fiscal year starting April 2021, as against its earlier estimate of 10.1 per cent. It has further projected India's growth to be 7.5 per cent in 2022, even as its recovery is being hampered by an unprecedented second wave of the Covid-19, the largest outbreak in the world since the beginning of the deadly pandemic. Meanwhile, India Ratings and Research stated that the burden of taxation, particularly indirect taxes, on households has worsened lately and is preventing them from spending more on consumption. However, continues fall in Covid-19 cases likely to aid the sentiments in the markets. India's daily Covid-19 cases remained below the 100,000 again. The country reported 91,227 new infections today and 2,213 new deaths, taking the total number of confirmed infections in India to 29,088,176 and deaths to 353,557. Besides, Union Finance Minister Nirmala Sitharaman is all set to chair a key meeting on June 11 to review infrastructure projects. There will be some reaction in textile industry stocks with CRIF-SIDBI’s report that after witnessing a continuous improvement for eight quarters, the textile sector’s asset quality slipped as gross non-performing assets (NPAs) rose to 16.92 per cent in December 2020 from 15.92 per cent in September 2020, triggered by the Covid-induced lockdown. Metal stocks will be in focus with Crisil’s report that large steel makers took huge strides in terms of both operations and financial performance last fiscal, increasing their market share by 500 basis points (bps) on-year to 58 per cent despite their share of industry capacity remaining unchanged. There will be some reaction in sugar stocks with a private report that Indians will likely consume 5% less sugar in the 2020-22 period as a direct result of demand loss due to the pandemic.

The US markets ended mostly higher on Tuesday as a lack of clear market catalysts kept institutional investors on the sidelines, while retail traders fueled the ongoing meme stocks rally. Asian markets are trading mixed on Wednesday ahead of Chinese inflation data expected later in the day.

Back home, in a volatile trading session, Indian equity benchmarks ended marginally lower on Tuesday, dragged by losses in Metal, Banking and Energy stocks amid weak cues from global markets. Markets made slightly positive start but soon turned negative, as domestic credit ratings agency Crisil cut its FY22 growth estimate for India to 9.5 per cent from the earlier 11 per cent due to the hit to private consumption and investments following the second wave of COVID-19. Traders took note of report that FPIs stood as net sellers in May to the tune of $397 million as against an outflow of $1,297 million seen in April. Selling further crept in as PHD Chamber of Commerce and Industry (PHDCCI) in its latest survey pointed out that businesses are struggling with rising cost of raw materials amid the second COVID wave as restrictions in many parts of the country have disrupted supply chains and also impacted the pace of economic recovery. In a survey, the industry body said that going ahead, a substantial stimulus to push the growth of the Indian economy impacted by the second wave of the pandemic would be crucial. Benchmarks trimmed most of their losses in late afternoon session, as some support came with Fitch Solutions held an optimistic outlook for the Indian consumer over 2021 with real growth in household spending forecast at 9.1 per cent year-on-year. This marks the start of a recovery from the negative 9.3 per cent year-on-year contraction over 2020. Besides, the government pledged to provide free COVID-19 vaccines to all adults, in an effort to rein in a pandemic that has killed hundreds of thousands. Also, daily COVID-19 cases in India have been on a downward trend since early May, with data from the health ministry on Tuesday showing 86,498 infections in the last 24 hours. Finally, the BSE Sensex fell 52.94 points or 0.10% to 52,275.57, while the CNX Nifty was down by 11.55 points or 0.07% to 15,740.10.