Markets likely to get cautious start amid foreign fund outflows

Indian markets failed to hold record highs and snapped the three-day run to end flat in the volatile session on Tuesday. Today, markets are likely to get cautious start amid foreign fund outflows. As per NSE data, Foreign Institutional Investors (FII) were net sellers of Indian equities worth Rs 2,784.14 crore. Overnight jump in crude oil prices likely to dampen sentiments in domestic markets. Oil prices climbed on Tuesday on reports of monetary stimulus from China, the world’s top crude importer, and amid concerns that growing conflict in the Middle East could hit regional supply. There will be some cautiousness as global rating agency S&P said India’s private sector will have to shoulder more investment responsibility for the country’s growth because India’s fiscal settings are constrained and the government might not be able to provide as much financial support as before. However, firm global cues likely to aid domestic sentiments. Some support may come as Moody’s Analytics in its new Asia Pacific outlook noted that the Indian economy will likely grow faster at 7.1% in 2024 from 6.8% projected earlier. While the research firm kept the country’s growth forecast unchanged at 6.5 percent for 2025, it projected a faster growth of 6.6% in 2026. Traders may take note of report that to ease onboarding for FPIs and reduce duplication of information, SEBI has proposed an abridged version of Common Application Form (CAF) that only requires information unique to the applicant. Further, the rest of the information will be auto-filled from the depository's records or certain fields will be disabled if not needed. Stocks of IT hardware companies will be in focus after the Centre extended the import management system for laptops and other IT hardware products for three more months - till December 31 - and asked companies to seek fresh approvals for imports based on new guidelines from January 1. The existing system is valid only till September 30. There will be some reaction in finance company’s stocks as S&P Global Ratings said reflecting the cumulative impact of Reserve Bank of India’s (RBI’s) actions, loan growth of rated finance companies in India will moderate to 18 per cent during the current financial year (FY25) from 20 per cent in FY24. Meanwhile, the Multi Commodity Exchange of India (MCX) has revised transaction fees for futures and options (F&O) contracts after a directive from the markets regulator SEBI. The new rates will be effective from next month. In primary market, KRN Heat Exchanger and Refrigeration’s initial public offer (IPO) will open for subscription today. The IPO is a book built issue of Rs 341.95 crore. The issue is entirely a fresh issue of 15.5 million shares.

The US markets ended higher on Tuesday shrugging off weak consumer confidence data, as mining stocks surged following China's announcement of a sweeping stimulus package. Asian markets are trading mostly in green on Wednesday as a rally sparked by support measures from Beijing continued. Also, Korea's Consumer confidence data for September will be on investors’ radar.

Back home, Indian equity benchmarks ended on a flat note in the volatile session on Tuesday as traders remained on sidelines ahead of F&O monthly expiry. Markets made a cautious start but soon entered into green terrain as traders took support with ICRA’s report stating that business opportunities worth Rs 2 lakh crore are expected to open up for engineering, procurement, and construction (EPC) players over the next decade for the completion of four priority interlinking river (ILR) projects.  Some support also came as S&P Global Ratings retained India's growth forecast at 6.8 per cent for the current fiscal and said it expects the RBI to start cutting interest rates in its October monetary policy review. In the economic outlook of Asia Pacific, S&P Global Ratings also retained its GDP growth forecast for the 2025-26 fiscal at 6.9 per cent and said solid growth in India will allow the Reserve Bank to focus on bringing inflation in line with its target. However, markets erased gains to trade marginally lower in early afternoon deals as investors weighed escalating tensions between Israel and Hezbollah and kept a close eye on oil price movements for direction. Israeli airstrikes on Hezbollah strongholds in Lebanon early Monday resulted in the deaths of at least 492 people, including 35 children, according to Lebanon's health ministry. Some concern also came as the annual Periodic Labour Force Survey report stated that India's unemployment rate remained unchanged at 3.2% in 2023-24 (July-June), as female unemployment rose to 3.2 percent from 2.9 percent in the previous year. But selling proved short-lived as key gauges once again entered into green terrain in second half of trading session amid foreign fund inflows. As per NSE data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 404.42 crore on Monday. Some optimism also came as private report stated that India’s aspiration to be a $7-trillion economy by the end of the decade can be achieved as a strong Prime Minister Narendra Modi rolls out the digital and physical infrastructure that’s drawing multinationals involved in manufacturing advanced products and services. But, in the final minutes of trade, markets failed to hold gains and ended flat, dragged by losses in FMCG, Telecom and Realty shares. Finally, the BSE Sensex lost 14.57 points or 0.02% to 84,914.04, and the CNX Nifty was up by 1.35 points or 0.01% to 25,940.40.