Markets likely to make cautious start on Thursday

Indian markets reversed initial gains to finish lower for a third straight day on Wednesday, as caution persisted across global markets ahead of a key inflation reading from the world's largest economy. Today, markets are likely to make cautious start amid lackluster global cues. Investors will closely monitor macro data - wholesale inflation figures for the month of June. There will be some cautiousness as India was ranked low at 135th place in terms of gender parity, despite an improvement of five places since last year on better performance in areas of economic participation and opportunity. On India, the WEF said its gender gap score recorded its seventh-highest level in the last 16 years, but it continues to rank among the worst performers on various parameters. Traders will be concerned with continues FII selling. Foreign Institutional Investors (FII) were net sellers once again on Wednesday. FIIs pulled out Rs 2,839 crore from domestic markets. However, some support may come as a private report stated that Indian economy is projected to grow 7.1-7.6 per cent in the current financial year despite shifting geopolitical realities across the world. There will be some reaction in edible oil industry stocks as industry body Solvent Extractors Association (SEA) said India’s palm oil imports rose marginally to 5,90,921 tonnes in June this year, but the shipment of RBD palmolein oil showed a sharp increase. Auto stocks will be in focus as the latest data released by the Society of Indian Automobile Manufacturers (SIAM), Passenger vehicle wholesales in India rose by 19 per cent year-on-year in June on the back of improvement in semiconductor supplies. The data showed passenger vehicle (PV) dispatches to dealers stood at 275,788 units last month against 231,633 units in June 2021. Corporate earnings for June quarter 2022 (Q1FY23) will continue to determine investor sentiments. ACC, L&T Infotech, Tata Elxsi will report Q1 numbers on Thursday, July 14.

The US markets ended lower on Wednesday after investors digested hotter-than-expected US inflation data, which fuelled fears that the Fed could raise key interest rates by as much as 100 basis points later this month. Asian market are trading mixed on Thursday following a weak session on Wall Street overnight.

Back home, Indian equity benchmarks gave up their early gains and ended lower by over half percent on Wednesday as investors turned cautious ahead of the key US retail inflation data due later tonight.  Benchmark indices made optimistic start and stayed in green in first half of trading session, as traders took encouragement with the government data showed that India's factory output measured by the Index of Industrial Production (IIP) posted a robust growth of 19.6 per cent in May 2022, sharply higher from 7.1 per cent recorded in the previous month. Also, India's retail inflation eased marginally to 7.01 per cent in June from 7.04 per cent in the previous month helped by softening crude and edible oil prices. Traders took note of report that Finance minister Nirmala Sitharaman has asserted that the pointed attack on inflation will need to continue, and that she has been monitoring price pressure item by item, as elevated inflation ultimately crimps growth. However, key gauges entered into negative terrain in the afternoon session, as investor sentiments got hit a with a private report that the country's current account deficit is likely to touch $105 billion or 3 per cent of the GDP this fiscal, mainly due to continuously widening trade deficit. Some concern also came after private report lowered its India gross domestic product growth projection for 2023 by 70 basis points from 5.4% to 4.7% as economic recovery faces several headwinds.  Adding to the pessimism, domestic rating agency ICRA in its latest report has said that rising bond yields will force banks to report Mark-To-Market (MTM) losses of up to Rs 13,000 crore on their investment portfolios in the April-June quarter (Q1FY23). Finally, the BSE Sensex fell 372.46 points or 0.69% to 53,514.15 and the CNX Nifty was down by 91.65 points or 0.57% to 15,966.65.