Markets likely to get positive start on Tuesday
India markets ended lower on Monday dragged by heavy selling across the board. Today, the markets are likely to make positive start tracking gains in Asian peers. Traders will be taking encouragement with Icra’s report stating that economic activity recorded a broad-based improvement in December as against November, showing a return of demand. Icra said most of the indicators have displayed a year-on-year (y-o-y) expansion in December 2020, which signals a tentative return to pre-COVID normalcy. Some support will come as the Finance Ministry on Monday released the 12th instalment of Rs 6,000 crore to states to meet the GST compensation shortfall, taking the total amount released so far under this window to Rs 72,000 crore. Traders may take note of report that India recorded 9,975 fresh cases of the coronavirus disease (Covid-19), the lowest daily rise since June 8, 2020, resulting in the total active cases in the country falling below 205,500. The death toll has increased to 152,593. India's caseload tally stands at 10,582,647. Meanwhile, as part of pre-Budget deliberations, Finance Minister Nirmala Sitharaman has held a meeting with state finance ministers who suggested steps to revive growth and boost revenue collection against the backdrop of COVID-19 crisis. Banking stocks will be in focus as S&P Global Ratings said India's banking system's low profitability and weak asset quality present some difficulties in significantly boosting digitalisation for several state-owned and smaller private-sector banks. There will be some reaction oil & gas sector stocks with Union Minister for Petroleum and Natural Gas Dharmendra Pradhan’s statement that fuel prices had gone up because of lower production in oil-producing nations due to the coronavirus pandemic. This lower production had caused an imbalance in demand and supply. There will be lots of earnings reaction to keep the markets buzzing.
The US markets was shut on Monday on account of Martin Luther King Jr. Day. Asian markets are trading mostly higher on Tuesday as investors awaited comments from Joe Biden's Treasury Secretary nominee Janet Yellen on US stimulus and the dollar.
Back home, Indian equity benchmarks ended the Monday’s trade in red terrain as traders remained worried on account of weak global cues. Markets made a cautious start as India registered 13,962 fresh Covid-19 cases in the last 24 hours, taking the tally to 10,572,672. Sentiments also remain dampened on report stating that the Indian economy is not recovering as fast as the government claims and the country's economy may contract 25 per cent in the current financial year. It further states that due to a big decline in the GDP during the current financial year, the budget estimates have gone completely out of gear and, therefore, there is a need to correct the Budget. Traders also took note of former chief economic adviser Arvind Virmani’s statement that the Indian economy is likely to contract in the range of 5-7.5 per cent this fiscal (FY21) but will see a growth of 9 to 11 per cent in FY 2021-22. Further, Virmani said in the upcoming Budget, the government should come up with policies to accelerate India's economic growth. Markets trimmed most of their initial losses in second half of the trade as the Reserve Bank of India (RBI) has decided to conduct purchase of Government securities under Open Market Operations (OMO) for an aggregate amount of Rs 10,000 crore on January 21, 2021. Some support also came after the government data showing that India's exports rose marginally to $27.15 billion in December 2020, while imports surged 7.56 per cent to $42.59 billion. The merchandise exports were valued at $27.11 billion in December 2019, while imports had totalled $39.59 billion. Traders also took some solace with Reserve Bank of India (RBI) in its latest report has showed that bank credit grew 3.2 per cent to Rs 107.05 lakh crore in the first nine months (April-December) of the current financial year (FY21), against a growth of 2.7 per cent registered in the corresponding period of 2019-20. In the fortnight ended March 27, 2020, bank advances stood at Rs 103.72 lakh crore. However, intense selling in last of trade dragged markets below their psychological levels of 14,300 (Nifty) and 48,600 (Sensex). Finally, the BSE Sensex fell 470.40 points or 0.96% to 48,564.27, while the CNX Nifty was down by 152.40 points or 1.06% to 14,281.30.
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