Domestic indices likely to get negative start amid weakness in global markets

Indian markets ended the choppy session with marginal cuts on Thursday as downbeat earnings updates from prominent companies offset signs of slowing inflationary pressures in the United States. Today, the domestic indices are likely to get negative start amid weakness in global markets. Investors likely to be remain cautious ahead of the April consumer inflation and March IIP data, slated to be released later in the day. There are expectations that April retail inflation to have cooled as rises in food and fuel prices moderated. Though, foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FII) bought shares worth Rs 837.21 crore on May 11, provisional data from the National Stock Exchange showed. Some support may come as CRISIL Rating stated that India’s vulnerability to global shocks is expected to reduce in FY24 as the Current Account Deficit (CAD) improves amid challenging external financing conditions. CAD is India’s major short-term external liability, affecting the exchange rate and investor sentiment. After peaking at 3.7 per cent of Gross Domestic Product (GDP) in the second quarter of the previous fiscal (FY22), CAD shrank significantly to 2.2 per cent in the third quarter of FT23. This decline was driven by falling oil imports, boost from services exports, and rising remittances. Traders may take note of report that Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Rajesh Kumar Singh has said that the government is at a fairly advanced stage of finalising a well-coordinated e-commerce policy and consumer protection rules, which will incorporate provisions of Open Network for Digital Commerce (ONDC). Agriculture related stocks will be in focus as the finance ministry exempted imports of crude soya bean and sunflower oil from basic customs duty and agriculture infrastructure and development cess till June 30, subject to certain conditions. Meanwhile, investors await more of financial results from India Inc for domestic cues, with Tata Motors and Cipla, among Nifty 50 constituents, due to post its earnings later in the day. From the broader market, Colgate-Palmolive, HPCL, IGL, Polycab will also announce their quarterly earnings today. Besides, Adani Transmission, Adani Total Gas and Indus Towers will also be eyed as the three stocks have been excluded from MSCI India Standard Index, as part of the May review. Max healthcare, HAL and Sona BLW, may see positive impact on being added to the index. All the changes will be effective May 31.

The US markets ended mostly in red on Thursday amid report that US Treasury Secretary Janet Yellen, CEO of JP Morgan warned about the debt limit and said the delay in increasing the debt limit will spread fear in the market. Asian markets are trading moistly lower on Friday following lackluster trade on wall street overnight.

Back home, Indian equity benchmarks fluctuated between gains and losses throughout the day and ended flat with negative bias on the weekly expiry day, as traders restrained from taking any long position ahead of macro-economic data i.e. Consumer Price Index (CPI) for the month of April and Index of Industrial Production (IIP) scheduled to be release on May 12, 2023. Benchmark indices traded with gains for most part of the day, as traders took support with Industry body PHDCCI’s statement that enhanced competitiveness of the Indian economy will attract more investments and create new employment opportunities for the growing young population in the country. Further, Union MSME minister Narayan Rane has urged the global and domestic industries to continue to invest in India, which is on its path to become the third largest economy. He said immense business opportunities are available in various sectors in India and promised full support to investors looking to invest in the country. But at the end, key indices failed to hold heads in green and settled with minor cuts as investors awaited more of financial results from India Inc for domestic cues. Traders overlooked exchange data showing that Foreign Institutional Investors (FIIs) were net buyers on Wednesday as they bought equities worth Rs 1,833.13 crore. Meanwhile, the government has extended the deadline to May 31 for Goods Transport Agencies to exercise the option of paying GST on forward charge basis for current fiscal. Under GST, Goods Transport Agencies have the option to collect and pay GST on forward charge basis. If they do not opt to do so, the liability to pay the tax gets transferred to the recipient of the service, under reverse charge mechanism. Finally, the BSE Sensex fell 35.68 points or 0.06% to 61,904.52 and the CNX Nifty was down by 18.10 points or 0.10% to 18,297.00.