Markets likely to get weak start amid global sell-off
Indian markets ended over a percent lower on Friday as major selling was seen in all sectors during the day. Today, the start of new week is likely to be weak amid sell-off in global markets. There will be some cautiousness as India registered 13,962 fresh Covid-19 cases in the last 24 hours, taking the tally to 10,572,672. Globally, more than 95.4 million people have been infected by the virus. Investors will keep tracking latest developments and trends on the COVID-19 pandemic front, especially the vaccine rollout in the country that kicked off on January 16 in the country and for signs of any adverse reactions from the vaccine. However, some respite may come later in the day with 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. Some support will come with 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 but will see a growth of 9 to 11 per cent in FY 2021-22. Market participants may take note that IMF Managing Director Kristalina Georgieva praised India for taking very decisive steps to deal with the coronavirus pandemic and its economic consequences and asked the country to do more this year to support an accelerated transformation of the economy. Besides, foreign portfolio investors (FPI) put in Rs 14,866 crore in Indian markets in the first half of January with participants expecting strong third-quarter results by companies. Auto stocks will be in limelight with Union Minister Nitin Gadkari’s statement that the much-awaited policy to scrap 15-year old vehicles is likely to get government nod soon. Banking stocks will be in focus as Bank credit grew 3.2 per cent to Rs 107.05 lakh crore in the first nine months of the current financial year, 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. Meanwhile, two companies -- Indian Railway Finance Corporation and Sequoia Capital-backed Indigo Paints -- are set to hit the market with their initial share-sale offers during the week to raise an estimated over Rs 5,800 crore. The three-day initial share-sale of Indian Railway Finance Corporation (IRFC) would be open for public subscription during January 18-20, while the IPO of Indigo Paints would open on January 20 and conclude on January 22.
The US markets closed in red on Friday pressured by intensifying lockdowns and weak US retail sales data. Asian markets are trading in mixed on Monday as disappointing news on US consumer spending tempered risk sentiment ahead of a closely-watched reading on the health of the Chinese economy.
Back home, Indian equity benchmarks ended the Friday’s trade in red terrain as traders opted to book profit especially in IT names that came out with their quarterly numbers. Markets started the session with caution as traders were concerned as India registered 15,515 fresh Covid-19 cases in the last 24 hours, taking the tally to 10,528,346. Traders were also seen taking a note of reports that Former Reserve Bank of India (RBI) Governor Raghuram Rajan says the government should take advantage of the peaks in the Indian equity markets right now and sell stakes in PSUs while prioritising spending to get the economy back on track. He said the upcoming Budget for the fiscal year beginning April 1 should look to provide relief to the poorer households and small and medium enterprises. Sentiments also remained dampened after rating agency CRISIL’s report which projected CPI Inflation at 6.4% for fiscal 2021 (FY21). It mentioned that after eight months above the Reserve Bank of India (RBI's) target band of 2-6%, Consumer Price Index (CPI) inflation was finally back in range, declining for the second straight month to a below-consensus 4.6% in December, from 6.9% in November. Average CPI inflation during April-December now measures 6.6%, down from the April-November average of 6.9%.Market participants overlooked report that Prime Minister Narendra Modi will launch India's Covid-19 vaccination drive tomorrow via video conferencing. This will be the world's largest vaccination programme covering the entire length and breadth of the country. Meanwhile, the government has notified a modified scheme to provide financial assistance to distilleries producing first-generation ethanol from feedstocks, including cereals. Finally, the BSE Sensex fell 549.49 points or 1.11% to 49,034.67, while the CNX Nifty was down by 161.90 points or 1.11% to 14,433.70.
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