Markets likely to get gap-down opening amid weak global cues

Indian markets extended losses to a second straight session on Monday to hit fresh two-month closing lows. Today, markets likely to continue their bearish trade with gap-down opening tracking weak global cues. There will be some cautiousness as Meghalaya Governor Satya Pal Malik said increasing inflation and unemployment are going to create a situation of crisis in the country but no leader is ready to speak on the issues. Malik, who has been critical of the Centre over issues of farmers, said the Union government could bring down prices of commodities by reducing taxes. However, some support may come later in the day as Union Finance Minister Nirmala Sitharaman said with licence quota raj prevailing during the 70 years of Congress regime, the policy change brought in by the central government under Prime Minister Narendra Modi has created new opportunities for the private sector by allowing them to manufacture products that were normally made by public sector units (PSUs). There will be some buzz in insurance industry stocks as latest data released by the Life Insurance Council showed that new business premiums (NBP) of life insurance companies jumped 84 per cent year-on-year (YoY) in April, propped up by 141 per cent increase in initial public offering-bound insurance behemoth Life Insurance Corporation (LIC) of India’s NBP. Metal stocks will be in focus as Crisil in a report stated that steel prices, which have been on a song for the past two years, are finally set to correct on weak seasonality, and may trade at around Rs 60,000/tonne by the end of the current fiscal year, down from the Rs 76,000/tonne peak it scaled last month. NBFCs stocks will be in limelight with a private report that small- and medium-size finance companies serving the bottom of pyramid are hamstrung by limited supply of bank funds and need Rs 2.32 trillion in debt in the next five years. IT stocks will also be on radar amid the plummeting rupee that hit an all-time low of Rs 77.5 per dollar on Monday. In the primary market, retail wealth management firm Prudent Corporate Advisory Services’ IPO will open for subscription today and close on Thursday. The company has raised Rs 159.43 crore from 24 anchor investors ahead of the offer.

The US markets ended lower on Monday as investors rushed to protect themselves against the prospect of a weakening economy. Asian markets are trading mostly in red on Tuesday as investors shed riskier assets on worries about higher interest rates and their impact on economic growth.

Back home, Indian equity benchmarks ended lower by over half percent on Monday following the downtrend in global equities. Markets opened in the negative territory and stayed in red for whole day, as traders were concerned with a private report that foreign funds' ownership in domestic equities fell to pre-COVID lows and hit a multi-year low of 19.5 per cent in March this year in NSE500 companies valued at $619 billion. Investors were also cautious ahead of crucial macro-economic data such as industrial output and retail inflation reading to be out later this week. However, markets erased most of their initial losses in late afternoon deals, taking support from a periodic labour force survey by the National Statistical Office (NSO) showing that the unemployment rate for persons of 15 years and above in urban areas slipped to 8.7 per cent in October-December 2021 from 10.3 per cent in the year-ago quarter. Some solace also came with Finance Minister Nirmala Sitharaman’s statement that the recent interest rate hike by the Reserve Bank was not surprising for her but the timing was, asserting that the rising cost of funds will not impact the government's planned infrastructure investments. Meanwhile, a private report stated that with the e-way bills generated for inter-state trade in goods under the Goods and Services Tax (GST) regime in April turning out to be the second highest so far, the monthly GST collections may hit Rs 1.5 trillion benchmark again in May (April transactions). Finally, the BSE Sensex fell 364.91 points or 0.67% to 54,470.67 and the CNX Nifty was down by 109.40 points or 0.67% to 16,301.85.