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Benchmarks likely to start session on positive note

Indian markets suffered sharp losses on Wednesday, falling for a second straight day on selling pressure across most sectors led by auto, metal, oil & gas, FMCG and consumer goods. Today, benchmarks are likely to start session on a positive note amid positive global cues and the ongoing earnings season. Some support will come as US Special Presidential Envoy for Climate John Kerry said India's goal of reaching 450 GW of renewable energy (RE) by 2030 is doable as it has already crossed the 100 GW RE mark. Traders may take note of as Moody's Analytics said in a report on reopening in the Asia Pacific region that a rebound in industrial production and demand owing to easing mobility restrictions fuelled India's current recovery with production appearing to have regained lost ground during the second Covid-19 wave. However, it has flagged concerns around volatility in inflation caused by rising food and fuel prices. Meanwhile, In a bid to avert power crisis being triggered in the country due to fuel shortages in the months following monsoon rains, the government proposes revise the coal stocking norms for thermal power plants, based on regular shift stock limits, depending on the actual fuel requirement during a particular period. Though, there may be some cautiousness as India, the world's third-largest energy consumer and importer, warned of high oil prices hurting the nascent and fragile global economic recovery. Telecom stocks will be in limelight reacting to their subscribers’ data. Reliance Jio continued to outpace rivals in terms of subscriber gains. It added 6 lakh users, in August, whereas Bharti Airtel onboarded over 1 lakh users. Metal sector stocks will be in focus as rating agency ICRA revised its non-ferrous metals sector outlook to positive from stable on the back of robust prices and improving demand despite a near-term concern of coal availability and increased cost of production for the non-ferrous metal companies. There will be some reaction in banking indusrty stocks as ICRA in its report said that the Indian banking sector is insulated against Covid-19. As per ICRA’s estimates the Gross Non Performing Assets (GNPAs) and Net Non-Performing Assets (NNPAs) are expected to further decline to 6.9-7.0 percent and 2.2.-2.3 percent by March 2022 which will continue to be a relief for the bottom-line of lenders.

The US markets ended mostly higher on Wednesday as investors eyed better-than-expected third-quarter earnings from corporates. Asian markets are trading mostly in green on Thursday following overnight gains on Wall Street.

Back home, Indian equity benchmarks were closed with losses for the second straight day on Wednesday amid heightened volatility, due to profit-booking at higher levels. Weakness across sectors, led by consumer durables, basic materials, metal and utilities shares pulled the markets lower. After making cautious start, markets slipped into the red, as traders got anxious with a private report stating that rising global commodity prices, led by crude, coal and metals, will shave a lot off the current account leading to higher imports and a rise in current account deficit, which is likely to print at 1.3 per cent of the GDP or $40 billion, up from 0.9 per cent surplus last fiscal. Selling further crept in, as International Monetary Fund downgraded its 2021 economic growth forecast for Asia after the highly infectious Covid-19 delta variant caused a spike in cases in parts of the region. Traders also took a note of rating agency Crisil’s report stated that gross non-performing assets (NPAs) of Indian banks may rise to 8-9 percent in the current financial year (FY22) but this will be much below the FY18 levels when NPAs reached a peak of 11.2 percent. However, key gauges manage to trimmed some losses in last minutes of trading session, as traders took some support with Services Export Promotion Council (SEPC) stating that the country’s services exports are expected to reach over $240 billion during 2021-22 on account of healthy performance by segments such as professional and management consulting services, audio visual, freight transport services, and telecommunications. Some support also came with Minister of State for Electronics and IT Rajeev Chandrasekhar’s statement that the government is looking at rolling out a five-year strategic perspective plan to make India a significant tech player. Meanwhile, GST Council is likely to consider one single tax rate for online gaming, racecourses, casinos and that could be as high as 28%. Finally, the BSE Sensex fell 456.09 points or 0.74% to 61,259.96 and the CNX Nifty was down by 152.15 points or 0.83% to 18,266.60.

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