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Indian markets ended higher on Tuesday due to buying in index heavyweights Infosys and Reliance Industries amid foreign fund inflows. Today, markets are likely to get negative start tracking losses in global markets on renewed fears of a banking crisis and ahead of US Fed's policy decision later in the day. Investors will be eyeing services PMI data to be out later in the day for more cues. Also, investors await more of financial results from India Inc for domestic cues, with Titan and Godrej Properties among others due to post their earnings later in the day. There will be some cautiousness with a private report that India’s unemployment rate climbed to a four-month high, as there were more people joining the workforce compared to available jobs in Asia’s third largest economy. Creating enough jobs for India’s burgeoning population will remain a key challenge for Prime Minister Narendra Modi’s government, especially as he looks to a third term in office in national elections due next summer. However, sustained foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FII) bought shares worth Rs 1,997.35 crore on May 2, provisional data from the National Stock Exchange showed. Some support will come as data released by the Reserve Bank of India (RBI) showed that India’s services exports shot up by a record 26.6 per cent in 2022-23 (FY23) to $322 billion, thus closing the gap with merchandise exports that grew only 6 per cent to $447 billion in the same period. Besides, there are reports that the Centre is expected to achieve the FY23 fiscal deficit target of 6.4% of gross domestic product (GDP) despite a downward revision in national income from the budgeted levels. Meanwhile, the Income Tax department will come out with draft rules within the next 8-10 days to specify the class of investors and norms of valuation of foreign investment in unlisted companies. The Finance Act, 2023, has amended Section 56(2)(viib) of the I-T Act, thereby bringing overseas investment in unlisted closely held companies, except DPIIT-recognised startups, under the tax net. Aviation industry stocks will be in focus as after Wadia-owned Go First filed for insolvency, driven by a cash crunch due to the grounding of nearly half its 57 aircraft. There will be some reaction in edible oil industry stocks as the Solvent Extractors' Association (SEA) of India (SEA), the industry body for the edible oil sector, advised its members to reduce retail prices in line with the falling prices of edible oils in the global market. Sugar stocks will be in limelight with a private report that cooperative sugar factories have written to Prime Minister Narendra Modi seeking to increase the minimum sale price (MSP) of sugar to improve their cash flows that would make clearing sugarcane dues to growers convenient.

The US markets ended lower on Tuesday as traders’ fears around contagion in the regional banking sector returned ahead of the Federal Reserve’s rate decision. Asian markets are trading mostly in red on Wednesday tracking overnight losses on Wall Street.

Back home, Indian equity benchmarks continued upward momentum for the sixth consecutive session on Tuesday fuelled by strong Q4 earnings and favourable domestic macroeconomic data. Markets made a optimistic start and stayed in green for whole day as traders took encouragement with data showing that manufacturing activities in India accelerated further and touched a four-month high in April, boosted by robust new business growth and improving supply-chain conditions. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) increased from 56.4 in March to 57.2 in April. Traders got support as GST collection grew by 12 per cent in April to Rs 1.87 lakh crore, the highest monthly mop-up since the rollout of the indirect tax regime. Some solace came as the International Monetary Fund (IMF) projected that India would be the fastest-growing economy in the world, despite confronting considerable challenges such as financial sector turmoil, inflationary pressures, effects of the Russia-Ukraine war, and the persistent impact of the Covid-19 pandemic over the past three years. Sentiments remained up-beat with NITI Aayog member Arvind Virmani’s statement that the Indian economy will grow at around 6.5 per cent in the current fiscal, notwithstanding high oil prices and increased geopolitical tensions. Virmani further said that he does not see any impact of the US and European banking crisis on the Indian financial sector. Additional support came with Commerce Secretary Sunil Barthwal’s statement that India's exports to the UAE are expected to rise by about 60 per cent to reach $50 billion by 2026-27 from $31.3 billion at present on the back of the free trade agreement between the countries. However, key indices trimmed some gains in late afternoon deals, as some concern came with data showing that the output of India's eight core sectors grew by 3.6 percent in March 2023, the slowest in the last five months. In the year-ago period, the core sectors had grown by 4.3 percent. The growth rate in March has halved as compared to the preceding month of February 2023, when it stood at 7.2 percent. The plunge in March was driven by a decline in the output of three key sectors - cement, electricity and crude oil. Finally, the BSE Sensex rose 242.27 points or 0.40% to 61,354.71 and the CNX Nifty was up by 82.65 points or 0.46% to 18,147.65.

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