Markets likely to make negative start on Wednesday

Indian markets closed at a near four-month highs on Monday. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) were closed on Tuesday on account of Muharram. Today, markets are likely to make negative start amid weakness in global peers. However, some respite may come as a private report stated that the Indian economy is likely to grow by 7.1% in the current fiscal on the back of steady performance by services, manufacturing and the farm sector. It added that the government investment will play a crucial role in boosting the growth rate. Some support will come as finance minister Nirmala Sitharaman said the Reserve Bank of India (RBI) has initiated measures to promote the rupee as a preferred currency for international trade settlement, which will boost exports. Besides, Commerce and industry minister Piyush Goyal said negotiations between India and the UK for a free trade agreement (FTA) is moving at a fast pace, allaying concerns that the evolving political situation in Britain may slow down the pace of talks. Traders may take note of Chief Economic Advisor V Anantha Nageswaran’s statement that the private sector needs to invest more in technology and research and development, and pay the MSME suppliers on time to help the economy. Meanwhile, the commerce ministry's arm DGTR has recommended imposition of anti-dumping duty on imports of a kind of cutting tool from China, for five years, to protect the domestic industry from cheap inbound shipments. There will be some buzz in the insurance industry stocks with Irdai data showing that new business premiums (NBP) of life insurance companies jumped 91 per cent year-on-year (YoY) in July, thanks to strong premium growth of state-owned Life Insurance Corporation (LIC). According to data released by the Irdai, life insurers reported NBP of Rs 39,078.90 crore in July. Banking sector stocks will be in focus with report that all the 12 public sector banks earned a cumulative profit of about Rs 15,306 crore, registering a 9.2 per cent growth annually, despite poor showing by large lenders like SBI and PNB. There will be some reaction in telecom industry stocks as Minister of State for Telecom Devusinh Chauhan said the long-awaited high-speed 5G services are expected to be rolled out in about a month. Chauhan said India is likely to deploy indigenously developed and manufactured 5G telecom gears by end of this year for 5G services. The last batch of India Inc's corporate earnings will trickle in - Coal India, Pidilite Industries, Tata Consumer Products will report their June quarter results (Q1FY23).

The US markets ended lower on Tuesday as a downbeat outlook from another giant chipmaker added to recession fears, with many traders unwilling to make any risky bets before Wednesday’s pivotal inflation reading. Asian markets are trading mostly in red on Wednesday following a Wall Street retreat and caution ahead of US inflation data.

Back home, Indian equity benchmarks settled with decent gains on Monday as a fall in oil prices and buying in Capital Goods, Power and Utilities stocks boosted investor sentiment. After making cautious start, key indices gained from strength to strength, as traders took encouragement with Reserve Bank Governor Shaktikanta Das’ statement that India is unlikely to be impacted by any adverse developments in Taiwan. The Governor said Taiwan accounts for only 0.7 per cent of India's overall trade and the capital flows from the island are also not very high. Some optimism also came as data with depositories showed after turning net buyers last month, foreign investors continued their positive stance on Indian equities and invested over Rs 14,000 crore in the first week of August amid softening of the dollar index. This was way higher than the net investment of nearly Rs 5,000 crore by Foreign Portfolio Investors (FPIs) in entire July. Sentiments remained up-beat in late afternoon deals, taking support from the Reserve Bank of India (RBI) data showed that India's foreign exchange (forex) reserves rose by $2.315 billion to $573.875 billion for the week ended July 29 on the back of robust capital inflows in the equities markets and strengthening of rupee from the record low.  Traders took some support with industry body FICCI stating that the Reserve Bank of India has maintained consistency in the recent monetary policy statement by focusing on the ‘withdrawal of accommodation’ as its stance to contain inflation. It said inflation has been over the comfort range of the Central Bank, however, the recent moderation in global commodity prices should hopefully offer some respite going ahead. Meanwhile, Prime Minister Narendra Modi said that states should develop a clear time-bound road map for the implementation of the National Education Policy (NEP) and focus on promoting trade, tourism and technology. He also asked for collective action to increase Goods and Services Tax (GST) collections. Finally, the BSE Sensex rose 465.14 points or 0.80% to 58,853.07 and the CNX Nifty was up by 127.60 points or 0.73% to 17,525.10.