Markets to get cautious start amid sell-off in global peers
Indian markets ended lower with cut of over 2 percent on Monday mirroring sell-off in global markets on rising coronavirus cases across the globe. Today, the markets are likely to make cautious start tracking sell-off in the global peers. There will be some cautiousness with CARE Ratings’ a multi-sector survey showed that business activity is unlikely to touch pre-COVID-19 levels before March 2021, and there is a need for the government to step in and give a push to the economy as it has not done enough till now. Though, some support may come later in the day with Commerce Minister Piyush Goyal’s statement that the current crisis should be used as an opportunity to make the transition to clean energy smoother, faster, more resilient and affordable. Traders may take note of former Niti Aayog vice chairman Arvind Panagariya’s statement that India will need fiscal stimulus, lower interest rates, faster bank recapitalisation and privatisation of some PSUs to return to 7 per cent growth rate. Besides, India's imports from China declined by 27.63 per cent during April-August this fiscal to $21.58 billion over the same period previous year. Meanwhile, markets regulator SEBI has permitted foreign portfolio investors (FPI) to write off shares of all the companies which they are unable to sell. There will be buzz in the metal stocks with CRISIL Research’s statement that Indian steelmakers have turned net exporters to China during April-August for the first time in several years, owing to weak domestic demand due to COVID-19 pandemic. Auto stocks will be in focus as ratings agency ICRA said domestic penetration of electric vehicles (EV) will remain low in the medium-term in segments like passenger vehicles and commercial vehicles due to high prices and lack of financial incentives from the government. There will be some reaction in cement industry stocks with India Ratings and Research’s (Ind-Ra) report that cement demand is expected to decline by 10 to 15 per cent year-on-year in the second quarter (July to September).
The US markets settled in red on Monday as concerns about new lockdowns in Europe and possible delays in fresh stimulus from Congress raised fears the U.S. economy faces a longer road to recovery than previously hoped for. Asian markets are trading lower on Tuesday following weakness on Wall Street.
Back home, falling for third session in a row, Indian equity benchmarks registered sharp losses of over two percent on Monday, on account of heavy selling in front line blue chip counters. Markets made flat-to-positive start, as traders took some support with CII’s business outlook survey showing that India Inc’s business sentiment has improved during July-September quarter as the government gradually unlocked the economy and business activity resumed. Some support also came with Commerce and Industry Minister Piyush Goyal’s statement that several multinational firms in sectors such as electronics, retail, e-commerce, and automotive, among others, have shown interest in shifting their base to India. He also said the government is working hard to institutionalize more investor friendly reforms to support and facilitate investments into India. After that, key gauges struggled to find direction and traded near neutral lines, as surging domestic cases of the novel coronavirus and sluggish trade across Asian equities kept investors cautious. Frontline indices came under heavy selling pressure in late afternoon session and ended near day’s low, as traders got anxious with after Reserve Bank of India’s data has showed that country's foreign exchange reserves declined by $353 million to $541.660 billion in the week ended September 11. During the reporting week, the fall in reserves was due to a decline in foreign currency assets (FCAs), a major component of the overall reserves. Investor sentiment also took a hit after a report released by the Finance Ministry stated that India's total external debt increased by 2.8 percent to $558.5 billion at the end of March mainly on account of a rise in commercial borrowings. The external debt stood at $543 billion at end-March 2019. Traders overlooked report that the COVID-19 pandemic has provided a unique opportunity to both India and Japan to further strengthen economic ties by enhancing cooperation in areas like software development, modern technology, infrastructure and manufacturing. Finally, the BSE Sensex fell 811.68 points or 2.09% to 38,034.14, while the CNX Nifty was down by 254.40 points or 2.21% to 11,250.55.
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