Market Ahead, July 1: Top factors that could guide markets today

The Indian markets are set for a bumpy start to the second half of the year despite positive global cues. At 7:15 AM, the SGX Nifty was trading nearly 48 points lower at 10,229 levels. On Wall Street, all three indices closed higher. The Dow Jones rose 0.85 per cent, the S&P 500 gained 1.5 per cent, and the Nasdaq Composite added 1.87 per cent.

Asian stocks also rose in initial deals. Japan’s Nikkei rose 0.1 per cent. Hong Kong’s Hang Seng index gained 0.5 per cent and Australian ASX 200 were up 0.87 per cent.

In commodities, Brent crude was last down 1.3 per cent at $41.15 per barrel.

Investors will today react to a string of datapoints released yesterday. The output of the eight core sectors of the economy shrank 23.4 per cent in May, against 37 per cent in the previous month, as factories remained hamstrung by a lack of labour and cash shortages owing to the nationwide lockdown.

The government’s total liabilities increased 0.8 per cent to Rs 94.62 trillion at March-end 2020 as compared to the preceding quarter. Bank credit covering all segments shrunk by 1.7 per cent in May, compared to March, with gross bank credit growth decelerating to 7 per cent.

The decline in tax revenue narrowed to 37 per cent in May, from 44 per cent in April on the back of improved indirect tax collections after lockdown restrictions were eased. Meanwhile, the Centre’s tax revenue at Rs 33,850 crore till May was just 2.1 per cent of the Budget target, against 7 per cent achieved last year during the same period.

The country's foreign exchange reserves in nominal terms increased by $64.9 billion in FY20, according to RBI. On a balance of payments basis, foreign exchange reserves surged by $59.5 billion during FY20.

Besides, the Centre’s fiscal deficit for the first two months of FY21 came in at Rs 4.66 trillion, or 58.6 per cent of the full year target primarily because of a crunch in tax and non-tax revenues and capital receipts.

For today, investors will track the Manufacturing PMI data as well as June auto sales numbers that will start pouring in from today.

On the Covid-19 front, India recorded over 18,000 Covid-19 cases in the last 24 hours, taking its total count to 5.85 lakh. Over 17,008 people have succumbed to the disease. 

Vodafone Idea's pre-tax loss rose 73 per cent to Rs 11,742 crore in the March quarter owing to exceptional expenses while the firm’s revenue remained flat on a year-on-year basis. ONGC reported a pre-tax loss of Rs 10,529 crore for the quarter because of a drop in crude oil prices, the impact of the lockdown, and exchange losses.

A total of six companies including Eveready are scheduled to announce their June quarter earnings today.

And, now, let's look at some other top news.

Sources have told Business Standard that the Future group has zeroed in on SBI General to sell its majority stake in the general insurance joint venture, and on Premji Invest for its life insurance venture stake. The Future group holds 51 per cent in the general insurance business and in the life insurance venture, the group’s stake is capped at 34 per cent.

S&P has said The Covid-19 pandemic may set back the recovery of banks by years, which would hit credit flows and, ultimately, the economy. It also expects non-performing assets to hit a fresh high this year.

And, a Mauritius-based subsidiary of Jindal Steel & Power yesterday said it has accepted a binding offer from Templar Investments to divest its entire stake in its Oman asset. The enterprise value of the deal is over $1 billion.

Read by Kanishka Gupta