Indian Shares Poised for Upturn Amid Global Market Rebound

Indian equities are anticipated to commence trading on a positive note on Tuesday, September 10, 2024, reflecting the global market recovery. This upward trend comes as investors eagerly await crucial U.S. inflation data and the Federal Reserve's impending interest rate decision.

The GIFT Nifty, a derivative of India's benchmark NSE Nifty 50 index, stood at 25,035 points early Tuesday, suggesting that the Nifty 50 will likely open above its previous close of 24,936.4. This indicator is closely watched by market participants as it often provides insights into the expected performance of Indian stocks.

On Monday, September 9, the Nifty 50 broke its three-session losing streak, primarily driven by gains in consumer and financial sectors. However, other market segments, including small- and mid-cap stocks, experienced declines. Analysts note that with most market segments trading at valuations exceeding long-term averages, attention is shifting towards global economic indicators.

Ajit Mishra, senior vice president of research at Religare Broking, commented on the market situation:

"A lot will depend on the performance of global markets, particularly the U.S., given the lack of major domestic triggers"

The global market landscape appears favorable, with Wall Street equities rebounding from Friday's weekly drop. This recovery followed mixed labor market data in the United States. European markets also showed positive momentum, buoyed by the prospect of potential central bank rate cuts later in the week.

Investors are now focusing on the U.S. Consumer Price Index (CPI) data, scheduled for release on Wednesday, September 11. This key inflation indicator is expected to show progress towards the Federal Reserve's 2% target rate. The CPI reading will likely play a crucial role in determining the magnitude of the anticipated Fed rate cut in the following week.

Asian markets opened higher on Tuesday, although concerns regarding China's economic growth outlook continue to temper overall sentiment. Despite these regional concerns, both foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) were net buyers in the Indian market on Monday, purchasing shares worth 11.77 billion rupees ($140.2 million) and 17.57 billion rupees, respectively.

In sector-specific news, pharmaceutical companies such as Zydus Lifesciences, Alkem Laboratories, Cipla, Biocon, Abbott India, and AstraZeneca Pharma India are likely to attract attention. This follows the recommendation by India's Goods and Services Tax (GST) council to reduce tax rates on select cancer drugs, potentially boosting the already significant Indian pharmaceutical industry.

Additionally, snack manufacturers like Gopal Snacks, Prataap Snacks, and Bikaji Food may see increased interest after the GST council proposed lowering the tax rate on traditional Indian savory snacks (Namkeens) from 18% to 12%.

In the infrastructure sector, HG Infra Engineering secured a project worth 7.81 billion rupees from the Ministry of Road Transport and Highways, while Ahluwalia Contracts bagged two orders totaling 13.07 billion rupees from Signature Global for housing projects.

As the Indian market navigates through these developments, investors will be keenly watching global cues and domestic policy changes to inform their investment decisions in the coming days.