Markets likely to make weak start on Monday

Indian markets ended slightly lower on Friday, with oil & gas stocks taking a heavy beating. Today, markets are likely to make weak start tracking weakness in Asian peers.  Also, investors await cues from the quarterly earnings season, with TCS all set to unveil its financial results later in the week. Traders will be concerned with continued FIIs selling. In June, FPIs sold equity worth Rs 50,145 crore through the stock market, taking the total FPI selling in CY 22 to Rs 2,23,944 crore. There will be some cautiousness with a private report that about 10 states in India have detected a new sub-variant of Omicron BA.2.75, which may be alarming in nature. Also, Sebi data showed that fund raising by listed companies through private placement of corporate bonds dropped 39 per cent to Rs 32,405 crore in the first two months of the current financial year, and outlook for the rest of the fiscal is uncertain too on expectation of further hike in interest rates. However, some support may come as GST collections in June witnessed a 56 per cent year-on-year rise to over Rs 1.44 lakh crore, Finance Minister Nirmala Sitharaman said, as she exhorted tax officers to ensure the system is so transparent that even an iota of discretion is not there. The gross GST collection in June is the second-highest collection after April when it was about Rs 1.68 lakh crore. Also, the Reserve Bank of India (RBI) said the country’s foreign exchange reserves increased by $2.734 billion to $593.323 billion for the week ended June 24 on the back of a surge in the core currency assets. Traders may take note of finance minister Nirmala Sitharaman’s statement that the government is watchful and mindful of the impact of falling rupee on the country's imports, while asserting that Indian currency has performed relatively better than others against dollar. Depreciation of rupee makes India's imports costlier, while on the other hand exports become attractive. Power stocks will be in focus as total outstanding dues owed by electricity distribution companies (discoms) to power producers rose by 4 per cent year-on-year to Rs 1,32,432 crore in June 2022. There will be some reaction in metal and oil industry stocks with a private report that the recently announced special tax on the export of steel, iron ore and petroleum products, and a windfall profit tax on crude oil producers are likely to hit the overall corporate earnings in FY23.

The US markets ended higher on Friday as weak manufacturing and construction spending data helped raise expectations that the Federal Reserve might opt for a less aggressive pace of rate hikes in the months ahead. Asian markets are trading mostly in red on Monday despite positive cues from Wall Street.

Back home, Indian equity benchmarks erased most of their losses to end marginally lower on Friday. Key gauges made negative start and extended fall in morning deals, as traders were concerned with the latest public debt management report showing that the government’s total liabilities rose 3.74 per cent to Rs 133.22 lakh crore in the March quarter from Rs 128.41 lakh crore in the three months ended December 2021. Some cautiousness also came as the Reserve Bank said India's external debt increased by $47.1 billion to $620.7 billion in the financial year ended March 2022. Some anxiety also came as RBI in its financial stability report said that persistently high inflation globally is to stay here longer than anticipated as the ongoing war and sanctions take toll on economies, threatening a further slowdown to global trade volume. Bourses remained under pressure in late afternoon deals with a private survey showed that India's factory output expanded at its slowest pace in nine months in June as elevated price pressures continued to dampen demand and output. While the Manufacturing Purchasing Managers' Index, compiled by S&P Global, remained resilient, it fell to a nine-month low of 53.9 in June from May's 54.6. Adding to the weakness, rating agency Crisil lowered its real GDP growth forecast for India to 7.3 percent in FY23 from 7.8 percent estimated earlier. It attributed the downward revision to higher oil prices, slowing of export demand, and high inflation. However, benchmark indices staged a smart recovery in the dying hours of trade, as traders took some support from the government data showing that the growth of eight core infrastructure sectors expanded by 18.1 per cent in May against 16.4 per cent in the year-ago period and 9.3 per cent in April 2022. Finally, the BSE Sensex fell 111.01 points or 0.21% to 52,907.93 and the CNX Nifty was down by 28.20 points or 0.18% to 15,752.05.