Sensex, Nifty may open flat with negative bias

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The domestic equity market may open flat with negative bias on Friday following weakness in Asian peers. Traders will be concerned as India recorded 40,078 new Covid-19 cases and 583 deaths in the past 24 hours, taking its tally to 32,117,052 and the death toll to 430,285. Kerala reported 21,445 new infections, Maharashtra 6,388, followed by Andhra Pradesh (1,859), Tamil Nadu (1,964), Karnataka (1,857), West Bengal (747) and Delhi (49).

There will be some cautiousness with a private report that monsoon rains in India in the week through Wednesday were below average for the second straight week, the weather office said, raising concerns over the production of summer-sown crops such as cotton, soybean, corn and rice. However, promising inflation and industrial production data may limit the downside.

Some respite may come as Industrial output for the month of June rose 13.6 per cent, in a sign that the low base effect of the last year is waning. Factory output, measured by the Index of Industrial Production (IIP) had contracted 16.6 per cent in the same month of last year and rose by 29.3 per cent in May. Industrial production surged mainly due to a low-base effect and good performance by manufacturing, mining and power sectors but the output remained below the pre-pandemic level. Some support may come as retail price inflation rate fell to a three-month low of 5.59 per cent in July from 6.26 per cent the previous month, due to a slower price rise in food items, particularly vegetables. Also, fuel inflation remained elevated in July despite some moderation from the previous month.

Traders may take note of reports that expressing the government’s commitment to continue with reforms, Finance Minister Nirmala Sitharaman has assured India Inc that it is ready to do everything required to revive and support economic growth hit by the Covid-19 pandemic.

There will be some buzz in aviation stocks as the civil aviation ministry hiked the maximum and minimum limit on domestic airfares by 12.5%. The government has also allowed domestic airlines to deploy more capacity as the demand in the domestic market has started improving owing to better consumer sentiment.

Auto stocks will be in focus as auto industry body SIAM said passenger vehicle wholesales in India increased by 45% to 2,64,442 units in July against 1,82,779 units in the same month last year. Besides, Niti Aayog has released a handbook to help state governments and local bodies in framing policies for setting up charging networks for electric vehicles. There will be some reaction in sugar industry stocks as trade body AISTA said sugar mills have exported 5.11 million tonnes of the sweetener so far in the ongoing 2020-21 marketing year ending September, with maximum shipments to Indonesia.

The US markets ended higher on Thursday as investors warmed to jobs data showing a steady US economic recovery. Asian markets mostly traded in red on Friday as the spread of the delta Covid-19 variant and China’s regulatory curbs restrained sentiment.

Back home, Indian equity benchmarks were back to their winning ways on Thursday, the day of weekly F&O expiry, amid solid buying in utilities, power and industrials stocks. Markets made positive start and stayed in green throughout the session, as traders took encouragement with Commerce Secretary BVR Subrahmanyam’s statement that the country’s merchandise exports are expected to touch $1 trillion by 2027-28 and the government has laid down a road map, including district as an export hub scheme, to achieve that number.