Flat open likely for stocks, Asian markets offer support

GIFT Nifty:

Early indications from GIFT Nifty futures point towards a 5.50 points decline for the Nifty 50 index.

Foreign portfolio investors (FPIs) sold shares worth Rs 23.09 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 6,658.31 crore in the Indian equity market on 28 June 2024, provisional data showed.

FPIs have bought shares worth over Rs 2037.47 crore in June 2024 (so far). They offloaded shares worth 42214.28 crore in May 2024.

Global Markets:

Asian stocks were trading higher on Monday as traders pondered the US rates outlook.

Japan's economy contracted more than expected in the first quarter of 2024, shrinking 2.9% year-on-year. This decline was primarily driven by a decrease in consumer spending amid stagnant wages and persistent inflation.

Meanwhile, China presented a mixed picture. According to a private survey (Caixin PMI), China's manufacturing activity in June grew more than anticipated, reaching 51.8, compared to the prior months reading of 51.7. This is in contrast to an official government PMI survey released on Sunday, which indicated a contraction in the manufacturing sector for the second consecutive month in June. China's manufacturing PMI came in at 49.5 in June 2024, unchanged from May.

It's important to note that these surveys cover different segments of the Chinese economy. The Caixin survey focuses on smaller, private businesses in southern China, while the official survey leans towards larger, state-run businesses in the north. This difference in focus may contribute to the contrasting results.

In the Europe, the far-right secured a slightly smaller portion of the vote during the initial phase of France's unexpected snap election than anticipated by certain polls. According to exit polls, Marine Le Pen's eurosceptic National Rally was the leading party in the first round of the French election but received a lesser number of votes than predicted by several analysts. This surprising electoral outcome has caused disruptions in the markets, especially as both the far-right and the second-place left-wing coalition have promised significant increases in spending. This occurs amidst France facing a high budget deficit, leading the EU to suggest disciplinary actions.

US stocks closed slightly lower on Friday after initial gains, as investors weighed mixed economic signals. The S&P 500 dipped 0.41%, and the Nasdaq Composite fell 0.71%. Both indexes reached new intraday highs earlier but retreated later. The Dow Jones Industrial Average shed a modest 0.12%.

Positive economic data painted a conflicting picture. The Commerce Department reported that US inflation in May slowed to its lowest annual rate in over three years. The core personal consumption expenditures price index, excluding volatile food and energy prices, rose just 0.1% in June and 2.6% year-over-year. However, consumer sentiment remained strong. The University of Michigan consumer sentiment index for June exceeded expectations, rising to 68.2 from a preliminary reading of 65.6. Additionally, the one-year inflation outlook dropped to 3% from 3.3% expected in May.

Domestic Markets:

Domestic equity benchmarks gave back some early gains Friday, ending with small losses after a four-day winning streak. Profit taking in private and financial stocks weighed on the market, while oil & gas, healthcare and PSU banks bucked the trend. High valuations remain a concern for some traders. The barometer index, the S&P BSE Sensex, was down 210.45 points or 0.27% to 79,032.73. The Nifty 50 index shed 39.90 points or 0.14% to 24,010.60. The 50 unit index rose 2.31% in the past four sessions.

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