Markets likely to make flat-to-positive start on Friday

Indian markets slipped into the red in a volatile session on Thursday, as the heavyweight financial and IT pockets gave up initial gains in the second half of the day. Today, markets are likely to make flat-to-positive start following Asian peers. Traders will be taking encouragement with the RBI report showing that bank credit grew by 13.29 per cent to Rs 123.81 lakh crore and deposits by 9.77 per cent to Rs 169.61 lakh crore in the fortnight ended on July 1. Some support will come as the government data showed that India’s merchandise exports in June grew by 23.52 per cent to $40.13 billion. Traders may take note of the finance ministry’s economic division in its monthly economic report for June stating that with global prices set to soften due to fears of a recession, the pressures caused by inflation in the Indian economy may weaken as well. However, there may be some cautiousness with report that India’s current account deficit is expected to deteriorate in the current fiscal on account of costlier imports and tepid merchandise exports. Traders may be concerned as the Centre for Monitoring Indian Economy said consumer sentiments continue to be sluggish with its index growing by 1.1% in June 2022. Though better than the 0.8% growth in May, it has slowed down significantly from 4-5% in January and February to 3% in March and April. Banking stocks will be in focus as Fitch Ratings said mounting repayment pressure for some borrowers, particularly micro, small and medium-sized enterprises, amid India's interest rate hikes will test banks' loan underwriting quality. However, it said asset-quality risks from higher rates should generally be moderate for most banks. There will be some reaction in stocks related to advertising industry with a private report that the Indian advertising market will remain the fastest-growing in the world over the next two years. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended mostly lower on Thursday as investors feared aggressive rate hikes down the road. Asian markets are trading mostly in green on Friday amid mixed cues from Wall Street overnight.

Back home, Indian equity benchmarks extended their fall for the fourth consecutive day and ended marginally lower on Thursday due to selling in IT and TECK shares amid weak global equities. Key gauges made positive start as traders took some support with 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. Some support also came with a private report stating that private equity investments in proptech firms rose 35 per cent to $741 million last year as investors sought to tap huge opportunities amid rising use of technology in the realty sector. Traders also took a note of Commerce and Industry Minister Piyush Goyal’s statement that the new Australian government supports the trade pact signed with India, and they are expected to soon approach their parliament for approval of the agreement. However, Indian indices gave away their initial gains and entered into red terrain in late morning deals, as exchange data showed foreign institutional investors (FIIs) remained net sellers in the capital market on Wednesday, offloading shares worth Rs 2,839.52 crore. Some concern came with India Ratings and Research’s report stated that Non-bank finance companies (NBFCs) may rely more on banks for their funding requirements as interest rates are hardening in the capital market. Also, 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. Traders overlooked report that India’s inflation based on wholesale price index (WPI) eased to 15.18% in the month of June 2022 as against 15.88% in May. Month-over-Month decrease witnessed in WPI for manufactured products but primary articles and Fuel & Power saw a marginal rise. Finally, the BSE Sensex fell 98.00 points or 0.18% to 53,416.15 and the CNX Nifty was down by 28.00 points or 0.18% to 15,938.65.