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Markets likely to get cautious start amid mixed global cues
Mar-22-2024

Indian markets ended notably higher on Thursday after the US Federal Reserve stayed on course to cut key rate thrice in 2024, despite elevated inflation. Today, markets are likely to get cautious start amid mixed global cues. Foreign fund outflows likely to dampen sentiments in the markets. Provisional data from the NSE showed that foreign institutional investors (FIIs) net sold shares worth Rs 1,826.97 crore on March 21. There will be some cautiousness with a private report that Private equity and venture capital investments declined to $2.2 billion in February, 39 per cent down when compared with the year-ago period's $3.7 billion. On a month-on-month basis PE, VC investments have witnessed a decline of 67 per cent. The number of deals were higher at 120 transactions in February, as compared to 86 deals in January and 57 in February 2023. However, some support may come as Amitabh Kant, former chief executive officer of NITI Aayog and India’s G20 Sherpa said India must aim to accelerate its pace of growth to 9-10 per cent over a three-decade period. Kant suggested that if India grows at 10 per cent, it would mean the gross domestic product (GDP) would surpass $35 trillion, elevating the per capita income to around $24,000. Kant emphasised India's potential to outpace Japan and Germany, projecting it to become the world's third-largest economy by 2027. Banking stocks will be in focus as a survey conducted by industry body FICCI and banking association Indian Banks’ Association (IBA) showed that the health of the Indian banking sector continues to improve with better asset quality and high credit growth. As per the survey, on asset quality, a large majority (77 per cent) of the respondent banks reported a decrease in the NPA levels in the last six months. There will be some reaction in IT stocks amid report that Accenture has lowered its revenue forecast for fiscal year 2024 citing global uncertainty and weak client spending on consulting services. It sees full-year revenue growth to be between 1-3 per cent, down from the earlier projection of 2-5 per cent. Aviation industry stocks will be in limelight after data released by the Directorate General of Civil Aviation (DGCA) showed that Indian carriers are set to operate 24,275 domestic flights every week during this year’s summer schedule, marking a 5.97 per cent year-on-year (Y-o-Y) increase. The summer schedule for this year commences from March 31 and continues until October 26, 2024 for the aviation sector.

The US markets ended higher on Thursday after the Swiss National Bank became the first major central bank to ease policy in this cycle, a day after the Federal Reserve maintained its outlook for 2024 rate cuts. Asian markets are trading mostly in red on Friday as Japan inflation accelerated in February.

Back home, Indian equity markets ended with significant gains on Thursday on across-the-board buying amid positive global cues after the US Fed signalled it could cut rates three times this year. Buoyant sentiments prevailed despite the weekly expiry of Nifty's F&O contracts. The markets made a positive start and stayed in green for whole day, as traders took support with CareEdge Ratings’ report that India’s economic activity likely hit a nine-month high in February, despite rural demand remaining weak and unemployment rising, thanks to a sharp expansion in exports, imports and corporate bond issuances. The CareEdge Economic Meter, a composite index covering 18 high-frequency economic indicators to track the state of the economy, suggested a 10.3% year-on-year uptick in activity levels. Traders took note of India's executive director at International Monetary Fund (IMF) Krishnamurthy Venkata Subramanian’s statement that India needs to grow at 8 per cent on sustained basis to create sufficient jobs to reduce poverty and inequality.  However, in afternoon deals, markets pared some of their initial gains. Traders got cautious with provisional data from the NSE showing that foreign institutional investors (FIIs) net sold shares worth Rs 2,599.19 crore on March 20, 2024. But, markets managed to hold notable gains to end higher, taking support from a report showing that India's business activity ended this fiscal year on a high note, expanding at the fastest rate in eight months in March. According to the report, the headline HSBC Flash India Composite PMI Output Index - a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors -- rose to 61.3 in March. Moreover, rising from 60.6 in February, the latest figure indicated a sharp rate of expansion that was the strongest since July 2023. Sentiments remained up-beat with Prime Minister Narendra Modi’s statement that India will lead the world in AI capabilities, and exhorted young entrepreneurs and startups to work on 'Indian solutions for global applications' to solve challenges faced by nations across the world. Finally, the BSE Sensex rose 539.50 points or 0.75% to 72,641.19 and the CNX Nifty was up by 172.85 points or 0.79% to 22,011.95.
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