05-12-2022 08:46 AM | Source: Accord Fintech
Markets likely to get negative start ahead of IIP, CPI data
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Indian markets failed to stay in the green and ended lower on Wednesday amid a rebound in oil prices in international markets. Today, markets are likely to make negative start mirroring weak global cues. Investors will closely track the Index of Industrial Production (IIP) data for March and crucial retail inflation (CPI) reading for April, which will be released later today. Traders will be concerned with private report that tightening of policy rates by major central banks, including the RBI, would adversely impact demand in the next 6-8 months and slow down the recovery process. There will be some cautiousness with a private report that India's central bank is likely to raise its inflation projection for the current fiscal year at its June monetary policy meeting and will consider more interest rate hikes. Some pessimism may come as a private report lowered its forecasts for India's economic growth in the next two fiscal years, saying a global slowdown, surging oil prices and weak domestic demand would take a toll on Asia's third-largest economy. Besides, as per provisional data available on the NSE, foreign institutional investors (FIIs) have net sold shares worth Rs 3,609.35 crore. Traders may take note of a private report that India Inc will hire 5 per cent more people in the April-June period compared to the first quarter (Q1) this year, as Covid infections decrease amid reopening of industries across the spectrum. Meanwhile, to strengthen the regulatory framework for collective investment schemes, markets regulator SEBI has enhanced the net worth criteria and track record requirements for entities managing such schemes. Auto industry stocks will be in focus as industry body SIAM said passenger vehicle dispatches from factories to dealers in the domestic market declined by 4 per cent in April as supply side challenges continued for the automotive industry. Total passenger vehicle domestic wholesales stood at 251,581 units last month as compared to 261,633 units in April 2021. There will be some reaction in tyre industry stocks with CRISIL’s report that the capital expenditure of tyre makers is expected to increase to around Rs 5,000 crore this fiscal on the back of improving demand, as against around Rs 3,700 crore annually in the preceding two fiscals. It added that the demand is likely to be driven by segments such as replacement, commercial and passenger vehicles (CVs and PVs), along with exports. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended lower on Wednesday led by a sharp drop in the Nasdaq, after US inflation data did little to ease investor worries over interest rates. Asian markets are trading mostly in red on Thursday tracking overnight losses on Wall Street.

Back home, Indian equity benchmarks extended their fall for the fourth straight session amid choppy trade on Wednesday, as participants waited IIP (Index of Industrial Production) and CPI (Consumer Price Inflation) data, due to be released tomorrow.  The indices started higher but soon gave up all of their respective gains, as traders turned worried as data released by the RBI showed that India's outward foreign direct investment (OFDI) nearly halved to $3.39 billion in April on an annual basis. The OFDI stood at $6.71 billion in April 2021. Some cautiousness came in with a private report that the goods and services tax (GST) council is mulling a 28 per cent tax on crypto currencies, at par with the current GST on casinos, betting and lottery. Traders also took a note of ICRA Ratings’ report that in spite of a sharp 40 per cent decline in bond issuances, states have been forced to pay more for their market borrowings as the weighted average interest rate touched a record 7.69 per cent at the latest auctions of state government securities. Benchmarks extended losses in afternoon deals, as sentiments were fragile as foreign investors have sold Indian equities worth $1.82 billion so far this month, shedding stocks worth $374 million in the fourth straight day of net selling on May 10. Traders were also cautious after private report stated that a majority of the Indian consumers are bullish about their financial situation in the next one year, but have raised concerns over rising cost of goods and services, which is affecting their purchasing decisions. Moreover, uncertainty around managing rising living costs is driving over 80 per cent in India to save more money. However, key gauges managed to pare some losses in final minutes of trade, taking support from Union Minister Anupriya Patel stating that India was expected to conclude free trade agreements with the United Kingdom, Canada, and the European Union before this year-end. Finally, the BSE Sensex fell 276.46 points or 0.51% to 54,088.39 and the CNX Nifty was down by 72.95 points or 0.45% to 16,167.10.

 

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