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Indian markets ended marginally lower in the volatile session on Thursday ahead of inflation data in India and the US. Today, start of the session is likely to be positive despite mixed global cues. Investors will be looking ahead to the Industrial growth and retail inflation data to be out later in the day for more directional cues. Reserve Bank of India Governor Shaktikanta Das said that India’s retail inflation is expected to be close to 5% in June, in line with the surveys conducted by the apex bank. Traders may take note of a private report that foreign exchange earnings from tourism in India are growing at less than 2 per cent. As per the report, May saw $2.13 billion, a 1.7 per cent increase over the same period last year. Meanwhile, India and Russia have taken a significant step towards strengthening their economic ties by agreeing to establish a national currency settlement system. Roman Babushkin, Charge d’Affaires of the Russian Embassy, described Prime Minister Narendra Modi’s recent visit to Russia as historic and game-changing, emphasizing the importance of the bilateral discussions in Moscow. However, there may be some cautiousness amid foreign fund outflows. On July 11, foreign institutional investors (FIIs) sold shares worth Rs 1,137.01 crore. Traders may be concerned as latest data released by the Reserve Bank of India (RBI) showed that deposit growth of commercial banks further slowed down to 10.64 per cent for the fortnight ending June 28. Credit growth also declined during the period. According to the data, scheduled commercial banks’ credit rose by 13.88 per cent year-on-year (Y-o-Y) to Rs 163.8 trillion as on June 28. The deposit base of banks expanded by 10.64 per cent Y-o-Y to Rs 211.95 trillion. Edible oil industry stocks will be in focus as Solvent Extractors' Association of India (SEA) data showed that import of vegetable oils, comprising edible and non-edible oils, rose 18 per cent in June to 1.55 million tonnes on higher imports of crude palm oil and crude sunflower oil. It noted import of vegetable oils during June 2024 stood at 1,550,659 tonnes compared to 1,314,476 tonnes in the year-ago period. There will be some reaction in auto component industry stocks as to a recent report by ICRA stated that the Indian auto component industry is projected to see a moderation in revenue growth to 5-7 per cent for the fiscal year 2025, following a robust 14 per cent growth in FY2024, on account of slower domestic original equipment manufacturer (OEM) segment growth and subdued export demand.

The US markets ended mostly in red on Thursday hit by losses in Nvidia, Apple and Tesla as investors rotated into smaller companies after softer-than-expected inflation data fed bets the Federal Reserve will cut interest rates in September. Asian markets are trading mixed on Friday following US inflation data for June, which stood at the lowest in three years.

Back home, in a largely lackluster trading session, Indian equity benchmarks recouped most of their losses and ended flat on Thursday on selective profit-taking despite optimism in global equities. Markets eyed the earnings season and the eagerly anticipated 2024 Union Budget on July 23. Markets made a positive start as traders took support with labour ministry stating that retail inflation for industrial workers eased to 3.86 per cent in May compared to 4.42 per cent in the same month a year ago. Some optimism came with a State Bank of India (SBI) report showing that between FY14 and FY23, India generated 125 million jobs, which is 4.3 times more than the preceding decadal period of FY04-FY14.  However, key indices soon erased initial gains and slipped into red in morning deals, as traders remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out on July 12. Some concern also came as Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao has flagged concerns over quality of disclosures made by some NBFCs and urged the auditing community to ensure that entities provide appropriate qualitative information to depositors as well as other stakeholders. However, key gauges managed to trim initial losses towards end and ended flat, as traders got some relief with credit rating agency, India Ratings and Research (Ind-Ra) report stating that India is likely to see a surge in private consumption in the current fiscal year (FY25), amid rural demand recovery owing to normal monsoon and moderating inflation. Some support came as Commerce and Industry Minister Piyush Goyal expressed optimism over India and the UK free trade agreement (FTA) and said both the countries are committed to the proposed FTA. He said that the initial comments made by the new UK government are ‘very’ encouraging. Britain's newly-elected Prime Minister Keir Starmer said he stood ready to conclude an FTA that worked for both sides. Finally, the BSE Sensex fell 27.43 points or 0.03% to 79,897.34, and the CNX Nifty was down by 8.50 points or 0.03% points to 24,315.95. 

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