Domestic indices likely to get gap-down opening amid global sell-off

Indian markets managed to halt a three-day losing streak on Thursday but lost steam in the final hours of a session that began on a strong note amid positive global cues. Today, domestic indices are likely to get gap-down opening amid sell-off in the global markets. Traders will be concerned as India Ratings said inflation, supply chain disruptions and a weak consumption demand could upset the revival in credit growth in the medium term. It said the reversal of the interest rate cycle--marked by the Reserve Bank of India’s 40 basis points increase in policy repo rate--would weigh down credit growth as borrowings become costlier. There will be some cautiousness as consequent to the 40 basis point hike in the repo rate announced by the Reserve Bank of India (RBI) on Wednesday, large banks such as ICICI Bank and Bank of Baroda have raised their lending rates by an equal amount on loans linked to the external benchmark. However, some respite may come later in the day as commerce and industry minister Piyush Goyal said all the key indicators such as jump in exports and high GST collection in April reflect that the country's economy is on the growth path. He said that goods and services exports have touched $675 billion in 2021-22, while the GST (Goods and Services Tax) collection in April touched the highest ever level of about Rs 1.68 lakh crore, up 20 per cent from the year-ago period. There will be some buzz in telecom industry stocks as latest data published by the telecom regulator Trai showed that telecom service providers' gross revenue declined by 2.64 per cent to Rs 69,695 crore in December 2021 quarter. Sugar industry stocks will be in focus as industry body Indian Sugar Mills Association (ISMA) said India has exported 7 million tonnes of the sweetener so far in the ongoing 2021-22 marketing year, and exports from the country may touch a new record of 9 million tonnes. There will be some reaction tea industry stocks as latest Tea Board data showed that tea exports declined by 2.4 per cent to 184.35 million kg during the April-February period of the last fiscal. The shipment of the crop was at 188.91 mkg in the corresponding period of the previous year. Infrastructure industry stocks will be in limelight as Minister Nitin Gadkari said the road transport and highways ministry aims to construct a record 18,000 km of highways in 2022-23 at a pace of 50 km per day. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended sharply lower on Thursday amid weak earnings and fed rate hikes fear. Asian markets are trading mostly in red on Friday after a 425-basis point lift in Bank of England's inflation forecast for 2022 as it raised key rates to their highest since 2009 rattles Wall Street.

Back home, Indian equity benchmarks failed to hold up their early gains as rally fizzled out in last leg of trade after traders opted to book profits amid worries of high inflation and prospects of more rate cuts that will slow growth going ahead. Markets made an optimistic start as sentiments remained upbeat in reaction to the US Fed meeting outcome, which came in line with the market expectations. Sentiments got a boost with the commerce ministry’s statement that India’s services exports set a new record of $254.4 billion (about Rs 19 lakh crore) in 2021-2022. It said the exports also hit an all-time monthly high of $26.9 billion in March. Adding more optimism, Reserve Bank Governor Shaktikanta Das said recent trade agreements and geopolitical conditions open up potential market opportunities for India. Traders took note of Chief Economic Adviser V Anantha Nageswaran’s statement that India’s growth is expected to be in the range of 7-8.5 per cent given the global uncertainties. Also, firm opening in Indian rupee aided the market sentiments. Markets traded in fine fettle for most part of the day as activity in India's dominant services sector grew at its fastest pace in five months in April on strong demand, prompting firms to add jobs for the first time since November, a private survey showed, but sky-rocketing inflation remained a major concern. The S&P Global India Services Purchasing Managers' Index rose to 57.9 in April from 53.6 in March. Adding more comfort among traders, SBI chairman Dinesh Khara said that the surprise rate hike by RBI accompanied with tightening of the cash reserve ratio illustrates the flexibility with which the central bank operates, and the move will support the markets. However, sell off in last leg of trade played spoil sports for the markets and dragged them near neutral lines as traders are now focusing towards earnings and upcoming macroeconomic data. Another factor is investors are pulling out funds from secondary markets and infusing in the ongoing LIC IPO. Finally, the BSE Sensex rose 33.20 points or 0.06% to 55,702.23 and the CNX Nifty was up by 5.05 points or 0.03% to 16,682.65.