Markets likely to get slightly positive start on Friday; auto stocks to be in focus

The benchmark equity indices BSE Sensex and NSE Nifty are likely to see a positive start on Friday tracking gains in global markets. Investors will continue to watch out for the OPEC+ meet outcome that was delayed to today after the United Arab Emirates blocked a plan for an immediate reduction in supply cuts. Some support will come as the India Meteorological Department (IMD) said Southwest Monsoon over the country is likely to be normal in July.

In the forecast for July, IMD Director General Mrutunjay Mohapatra said rainfall is not expected to be good in the first week, but it is likely to pick up in the second half of the second week of July. There may be some cautiousness as Reserve Bank Governor Shaktikanta Das said the second wave of the pandemic took a grievous toll on India, but the dented economic activity has started recovering from late May. In a first, Das flagged the rising data breaches and cyber-attacks as a risk facing the economy, along with others like firming global commodity prices.

There will be some reaction in banking stocks as the Financial Stability Report of Reserve Bank of India showed banks did not see their bad loan position worsening during the pandemic year of 2020-21 as the gross non-performing asset (GNPA) ratio stayed stable at 7.48% of the gross advances at the end of March 31. It added that the GNPA ratio of banks may rise to 9.8-11.22% by March 2022 under various stress scenarios due to the impact of the COVID pandemic.

Auto stocks will be in focus as major automakers, including Maruti Suzuki, Hyundai, Tata Motors, Mahindra & Mahindra, Kia, Toyota and Honda, reported healthy growth in passenger vehicles sales in June, recovering from the disruptions induced by the second wave of Covid-19. There will be some buzz in power sector stocks with power ministry data showing that power consumption in the country grew by nearly 10% in June to 115.39 billion units (BU) compared to a year ago, but is still lower than the pre-Covid level.

The US markets ended higher on Thursday as a new quarter and the second half of the year began with upbeat economic data and a broad-based rally. Asian markets are trading mostly in green on Friday as investors look ahead to a closely-watched US jobs report set to be released later.

Back home, Indian equity benchmarks closed lower for a fourth straight session on Thursday as new Delta and Delta plus variants of novel coronavirus push Covid-19 cases higher across the globe. The BSE Sensex fell 164.11 points or 0.31% to 52,318.60, while the NSE Nifty settled by 41.50 points or 0.26% to 15,680.00.