Markets likely to make positive start on Tuesday

Indian equity markets ended deeply in red on Monday along with global peers, as US Federal Reserve Chairman Jerome Powell’s comments on keeping interest rates high rattled investors who were hoping that the economic slowdown would prompt a less restrictive policy and a pause in rate hikes soon. Today, markets are likely to make positive start tracking mostly positive cues from other Asian markets. Some support may come as commerce and industry minister Piyush Goyal has said that India is looking at getting duty-free access for different products, identified under One District One Product (ODOP) initiative to promote their exports. The Minister said that these products, which include gold jewellery, toys, handicrafts and handlooms, hold huge opportunities. Meanwhile, as part of its efforts to strengthen customer protection, Reserve Bank of India is considering setting up a fraud registry to create a database of fraudulent websites, phones and various modus operandi used for digital fraud. Such a database will help prevent these fraudsters from repeating the fraud as the websites or phone numbers would be blacklisted. Traders may take note of report that the commerce ministry has said stakeholders of special economic zones (SEZs) suggested measures to further improve the draft Development of Enterprises and Services Hub (DESH) Bill 2022, which would replace the existing SEZ law. In the Union Budget this year, the government proposed to replace the existing law governing SEZs with a new legislation to enable states to become partners in Development of Enterprise and Service Hubs. However, there may be some cautiousness in later in the day as  rating agency Icra in its latest report has said India Inc saw a 39 per cent jump in top lines during April-June quarter but their operating margins declined 213 basis points to 17.7 per cent due to input cost inflation. There may be some buzz in banking stocks as the Centre may revamp the target-setting mechanism for public sector banks (PSBs) and is looking to come up with a fresh framework to monitor the performance of state-owned lenders. The new framework could be on the lines of Statement of Intent (SoI) the government used to sign with PSBs to fix their annual targets.

The US markets ended lower on Monday, adding to a sharp selloff last week as investors continued to grapple with the fears about looming economic pain stemming from the Federal Reserve’s aggressive interest rate hikes. Asian markets are trading mostly in green in early deals on Tuesday, recouping some of the losses in the previous session, despite the broadly negative cues from US markets overnight.

Back home, Indian benchmark indices ended the Monday’s trade deep in red terrain with frontline gauges settling below their crucial 58,000 (Sensex) and 17,350 (Nifty) levels, amid global sell off. Sentiments remained dampened since beginning as key gauges made a gap-down start. Investors’ sentiments took a hit as the Reserve Bank of India (RBI) data showed that the country’s foreign exchange reserves fell $6.687 billion to $564.053 billion in the week ended August 19. In the previous week ended August 12, the reserves declined $2.238 billion to $570.74 billion. Traders were worried as Reserve Bank of India (RBI) Deputy Governor Michael Debabrata Patra has said that in the near-term, inflation trajectory continues to be ‘heavily contingent’ upon the evolving geopolitical developments, international commodity prices and global financial sector developments. Sentiments also got hurt with the Ministry of Statistics and Programme Implementation in its latest report for July 2022 has said that as many as 386 infrastructure projects, each entailing an investment of Rs 150 crore or more, have been hit by cost overruns of more than Rs 4.7 lakh crore. According to the Ministry, which monitors infrastructure projects of Rs 150 crore and above, out of 1,505 projects, 386 reported cost overruns and as many as 661 projects were delayed. Some concern also came as exchange data showed foreign institutional investors (FIIs) were net sellers in the capital market as they offloaded shares worth Rs 51.12 crore on Friday. Market participants paid no heed towards Finance Minister Nirmala Sitharaman’s statement that the Indian economy will grow at 7.4 per cent in this fiscal (FY23) and continue at the same level in the next fiscal as well. She added the International Monetary Fund and the World Bank have projected India’s growth to be the fastest for the next two fiscal years, and their estimates are in sync with that of the Reserve Bank of India as well. Finally, the BSE Sensex fell 861.25 points or 1.46% to 57,972.62 and the CNX Nifty was down by 246.00 points or 1.40% to 17,312.90.