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Markets likely to get cautious start on Friday
Mar-24-2023

Indian markets ended in red on Thursday on aggressive selling after Janet Yellen’s hawkish comments spooked markets across the globe. Today, domestic equity markets are likely to get cautious start tracking weakness across Asian peers. Markets are likely to remain range-bound in today’s session due to a lack of triggers. Traders will be concerned amid foreign fund outflows. FIIs were net sellers to the tune of Rs 995 crore in the cash markets on March 23, provisional data from exchanges showed. However, some support will come as Chief Economic Advisor (CEA) V Anantha Nageswaran indicated that with global crude oil prices on the slide, India’s current account deficit (CAD), too, will drop in the current fiscal year (2022-23, or FY23) and the next (2023-24, or FY24), with the external situation being quite stable. Separately, Nageswaran said a host of global issues pertaining to inflation, energy security and climate change would be discussed in the G20 second Framework Working Group meeting scheduled to begin Friday. Besides, India’s exports to the UAE are expected to touch an all-time high of $32 billion by the end of this fiscal due to the benefits of free trade agreement between the countries. Meanwhile, Agriculture Minister Narendra Singh Tomar has launched a DigiClaim platform under the national crop insurance portal for speedy disbursal of claims to insured farmers. Banking stocks will be remaining in limelight with report that Finance minister Niramala Sitharaman is scheduled to meet managing directors of public sector banks (PSBs) on March 25 for performance review in the backdrop of failure of few banks in the US and liquidity crisis faced by Credit Suisse. There will be some reaction in metal stocks with a private report that India's iron ore exports are set to fall 24% to a five-year low in the current fiscal year to March, as an export tax imposed last May stalled shipments. Automobile industry stocks will be in focus amid report that vehicle prices across commercial, passenger, and two-wheeler segments in India are set to rise in April as stricter emission rules kick in and automakers pass on the impact of input cost inflation. Top companies like Hero MotoCorp, Maruti Suzuki and Tata Motors have announced price increases across product portfolios. Others are likely to follow suit soon.

The US markets ended higher on Thursday cheered by Treasury Secretary Janet Yellen's reassurance that measures would be taken to keep deposits safe in the banking system. Asian markets are trading mixed on Friday despite Treasury yields extending declines for a third day.

Back home, Indian equity benchmarks swung between gains and losses on Thursday and finally settled in red due to a sell-off in Realty and Banking stocks amid a weak trend in European equities. Markets made a negative start, as traders were anxious with Fitch Ratings stating that India has some room to cut capital expenditure in FY24 as there may be pressure on revenue as the buoyancy assumptions in the Union budget may be inflated. But, key gauges erased losses and recovered gradually in afternoon deals, as traders took support with exchange data showing that Foreign Institutional Investors (FIIs) turned net buyers in the domestic capital market on Wednesday as they purchased shares worth Rs 61.72 crore. Some support also came as data put out by the Reserve Bank of India (RBI) in its latest monthly bulletin showed that transmission of repo rate to banks’ deposit and lending rates seems to be better in an interest rate easing cycle than in the monetary tightening period.  However, the recovery was short-lived as key indices once again fell sharply in late afternoon deals, due to a sluggish start in the European market led by a 50bps hike by the Swiss National Bank. Meanwhile, industry body PHDCCI has approached the government seeking reintroduction of the Credit Linked Capital Subsidy Scheme to facilitate technology upgradation of micro and small enterprises. On the global front, European markets were trading lower amid U.S. Federal Reserve's rate hike move that was widely expected. Investors also concerned about the health of the banking industry after US Treasury Secretary Janet Yellen commented that the regulators are not looking to provide any 'blanket' deposit insurance to stabilise the US banking system, without working with law makers.  Asian markets settled mostly higher on Thursday despite the U.S. Federal Reserve raised rates by 25 basis points and signaled another hike to fight inflation. Finally, the BSE Sensex fell 289.31 points or 0.50% to 57,925.28 and the CNX Nifty was down by 75.00 points or 0.44% to 17,076.90.
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