Markets likely to get cautious start on Thursday

16 Mar 2023 Evaluate

Indian markets surrendered early gains and ended lower for a fifth consecutive session on Wednesday amid unabated foreign fund outflows. Today, markets are likely to get cautious start as investors may react to mixed global cues, trade balance data, plummeting bond yields and tumbling oil prices. There will be some volatility in the markets amid weekly F&O expiry later in the day. Global sentiment remains weak amid signs that the U.S. banking crisis is spreading to Europe. Fear amongst investors emanating from a fresh turmoil at the Credit Suisse Group as a top shareholder refused additional financial assistance. Back home, there will be some cautiousness as the data released by the commerce ministry showed that India's exports dipped in February for the third consecutive month by 8.8 per cent to $33.88 billion against $37.15 billion in the same month last year. Imports also declined by 8.21 per cent to $51.31 billion as against $55.9 billion recorded in the corresponding month last year. The country's trade deficit in February stood at $17.43 billion. Foreign fund outflows likely to dent domestic sentiments. The National Stock Exchange's provisional data showed foreign institutional investors (FII) sold shares worth Rs 1,271.25 crore on March 15. However, some positivity may come in the market with IMF senior representative to India Luis Breuer stating that the RBI was doing the right thing on rate hikes, and added that there was need for more. Breuer also said the Budget’s focus on prudence and fiscal consolidation was a good step that will reduce and stabilise public debt, which is quite high in the country compared to other G20 countries. Besides, Commerce Secretary Sunil Barthwal said the government is expected to release the new five-year foreign trade policy (FTP) by the end of this month, with a view to promoting the country's outbound shipments of goods and services. Aviation and paint company’s stocks likely to be in limelight after oil prices slumped nearly 5 percent to their lowest level in more than a year overnight on recession fears. The edible oil industry stocks will be in focus as the Solvent Extractors' Association of India (SEA) India's edible oil imports rose 12 per cent year-on-year in February to 10.98 lakh tonnes on higher imports of crude palm oil. There will be some reaction in dairy industry stocks with report that total milk production in the country during 2021-22 is 221.06 million tonnes and registered an annual growth rate of 5.29 per cent.

The US markets ended mostly in red on Wednesday as problems at Credit Suisse revived fears of a banking crisis, eclipsing bets on a smaller US rate hike this month. Asian markets are trading mostly lower on Thursday as fear of a banking crisis was reignited by fresh troubles at Credit Suisse, leaving markets on edge ahead of a European Central Bank meeting later in the day.

Back home, Indian benchmark indices erased their initial gains to end lower for the fifth straight session on Wednesday amid unabated selling pressure in select index heavyweights like Bharti Airtel, Indusind Bank and Reliance Industries. Earlier in the session, the indices made a gap-up start tracing positive global cues. Traders got some encouragement as Minister of State for Finance Pankaj Chaudhary said the government is taking steps to make India a $5 trillion economy earlier than the International Monetary Fund’s forecast year of 2026-27. Some support also came with Commerce and Industry Minister Piyush Goyal's statement that the country's goods and services exports are marching ahead to cross $750 billion in the current financial year (FY23) and talks for expanding rupee trade with certain countries are at an advanced stage. Sentiments remained positive in afternoon deals with Anurag Jain, the secretary in the Department for Promotion of Industry and Internal Trade (DPIIT), stating that inclusion and equity are important for India to transform into a developed nation, with technology aiding this growth. However, gains remain capped amid foreign fund outflows. However, markets reversed all of their initial gains in late afternoon session and ended near day's low points amid foreign fund outflows. Foreign institutional investors (FII) sold shares worth Rs 3,086.96 crore on March 14, the National Stock Exchange's provisional data showed. Traders also turned cautious amid a private report stating that venture capital (VC) funding for Indian startups has taken a sharp cut. It dropped to $25.7 billion in 2022 from $35.8 billion in 2021 as the global economy experienced turbulence. Some anxiety also came with another private report stating that hiring intentions will remain marginally lower during the second quarter (April-June) this year as employers continue to have difficulty in finding people with the right skills. Finally, the BSE Sensex fell 344.29 points or 0.59% to 57,555.90 and the CNX Nifty was down by 71.15 points or 0.42% to 16,972.15.

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