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Benchmarks likely to make optimistic start on Wednesday

Indian markets ended lower on Monday with cut of around a percent each dragged by losses in IT, auto and FMCG sectors. Markets were closed on Tuesday for Republic Day. Today, the markets are likely to make optimistic start tracking gains in Asian peers. Traders will be taking encouragement as the IMF projected an impressive 11.5 per cent growth rate for India in 2021, making the country the only major economy of the world to register a double-digit growth this year amidst the coronavirus pandemic. Some support will also come as the latest round of FICCI's Economic Outlook Survey showed that India's gross domestic product (GDP) is expected to contract by 8 per cent in 2020-21. However, there may be some cautiousness as India recorded 12,569 fresh cases of the coronavirus disease (Covid-19). The caseload tally stands at 10,690,279. Globally, more than 100 million people have been infected by the virus. The country continues to be second-most-affected globally, and ranks 14th among worst-hit nations by active cases. Besides, overseas investment by domestic firms fell by over 42 per cent to $1.45 billion in December 2020, according to Reserve Bank data. In the year-ago period, companies in India had invested $2.51 billion in their foreign firms (joint ventures / wholly-owned units). Agriculture stocks will be in focus with a report that the government is likely to raise farm credit target to about Rs 19 lakh crore in Budget 2021-22 to be presented on February 1, with the aim of doubling farmers' income by 2022. There will be some reaction in infrastructure stocks with report that as many as 450 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns totalling more than Rs 4.28 trillion. Meanwhile, Blackstone-backed Aadhar Housing Finance has filed preliminary papers with markets regulator Sebi to raise Rs 7,300 crore through an initial public offering. There will be lots of earnings reaction to keep the markets buzzing.

The US markets settled lower on Tuesday as investors digested a batch of corporate earnings results, while an expected policy announcement from the Federal Reserve on Wednesday helped to limit moves. Asian markets are trading mostly in green on Wednesday as the International Monetary Fund (IMF) raised its growth forecast for the global economy this year.

Back home, extending their losing streak for third straight session, Indian equity benchmarks ended the Monday’s trade with a cut of around a percentage point. Markets started the day on positive note as traders took encouragement with former deputy chairman of Planning Commission Montek Singh Ahluwalia’s statement that the country’s economy, which contracted in the first two quarters of the current fiscal, has started recovering at a gradual pace. Some support also came after the UN has said that foreign Direct Investment into India rose by 13 per cent in 2020, boosted by interest in the digital sector, and while fund flows '’declined most strongly'’ in major economies such as the UK, the US and Russia due to the COVID-19 pandemic, India and China ‘bucked the trend’. An ‘investment trends monitor’ issued by the United Nations Conference on Trade and Development (UNCTAD) on Sunday said that global foreign direct investment (FDI) collapsed in 2020 by 42 per cent to an estimated USD 859 billion from USD 1.5 trillion in 2019. But soon, markets turned volatile as traders got worried with the RBI data showing that the country's foreign exchange reserves declined by $1.839 billion to $584.242 billion in the week ended January 15. Market participants couldn’t managed to hold their nerves and started selling risky assets amid reports that Indian and Chinese troops came face-to-face at Naku La in North Sikkim last week amid the tense border standoff between the two sides in eastern Ladakh. They said the Chinese troops attempted to transgress into the Indian side of the Line of Actual Control (LAC) but were stopped by the Indian military personnel. It is learnt that a brawl broke out when the Indian troops stopped the Chinese soldiers. Traders failed to get any sense of relief with WEF report that investment in upskilling has potential to boost the global GDP by $6.5 trillion by 2030, including by $570 billion (over Rs 40 lakh crore) in India alone - the third highest after China and the US. Finally, the BSE Sensex fell 530.95 points or 1.09% to 48,347.59, while the CNX Nifty was down by 133.00 points or 0.93% to 14,238.90.

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