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Indian markets ended flat on Tuesday as a rise in IT and FMCG space were capped by a decline in banking and financial stocks. Today, the markets are likely to get flat-to-negative start amid weakness in global peers. Slight rise in coronavirus cases is likely to dampen sentiments in the markets. A day after recording less than 200,000 fresh Covid cases for the first time in 41 days, India's new infections on Wednesday again soared to 208,886. Deaths from the disease rose by 4,172. The country's total cases now stand at 27,156,382, while total fatalities are at 311,421. There will be some cuatiousness as an SBI research report 'Ecowrap' stated that the country's GDP is likely to grow at 1.3 percent in the fourth quarter of 2020-21 and may see a contraction of around 7.3 percent for the full financial year. However, some respite may come later in the day as the government begun assessing the impact of the second wave of infections on different sectors and may look at providing support at an appropriate time to segments requiring fiscal help, with the world's worst outbreak of COVID pandemic stalling a nascent economic recovery. Some support may come as industry chamber CII said healthy flow of FDI into the country corroborates India's status as a preferred investment destination among global investors. Traders may take note of report that Reserve Bank of India (RBI) Governor Shaktikanta Das told chiefs of select private banks to boost credit flows to retail and business borrowers. He also called on them to implement the measures announced by the central bank on May 5. Meanwhile, the Goods and Services Tax (GST) Council will meet on May 28 to take up recommendations related to fighting the coronavirus pandemic. The COVID-related discussions are likely to be in terms of the tax rates for vaccines, drugs and pharmaceuticals. Auto stocks will be in focus as India Ratings and Research (Ind-Ra) said the second wave of the Covid-19 pandemic has interrupted the sales momentum recorded by the automobile industry in 3Q-4Q FY21. Accordingly, many original equipment manufacturers (OEMs) have advanced maintenance shutdowns to April and May on account of dampening consumer sentiments, closure of automotive dealerships, as well as supply-side constraints. There will be some reaction in agriculture related industry stocks as the agriculture ministry said India's foodgrain production is estimated to rise 2.66 per cent to a new record of 305.43 million tonnes in the current crop year 2020-21, on better output of rice, wheat and pulses amid good monsoon rains last year.

The US markets ended lower on Tuesday and each of Wall Street's main indexes failed to stray far from the unchanged mark following a rally in the prior session as investors continue to try and assess the route of inflation. Asian markets are trading mixed on Wednesday after a recent Wall Street rally stalled overnight stateside.

Back home, Indian equity benchmarks erased gains to end Tuesday's volatile session flat dragged by power, energy and banking stocks. Tracking solid global cues, the domestic equity indices opened gap-up and stayed in green for most part of the day. Fall in fresh coronavirus cases in the country aided the sentiments in the markets. India continued to record steady decline in the number of fresh coronavirus cases with the daily toll slipping below the 200,000-mark. India's fresh Covid cases stood at 1.95 lakh. It is the lowest level of cases in the last 41 days. Some optimism also came as the commerce and industry ministry said that foreign direct investment (FDI) equity inflow into the country grew 19 per cent to $59.64 billion during 2020-21 on account of measures taken by the government on the fronts of policy reforms, investment facilitation and ease of doing business. Traders took note of report that a Reserve Bank of India (RBI) study has advocated a mix of fiscal and monetary policies to mitigate economic downturn, saying demand side channel needs to be complemented with a conducive monetary transmission mechanism from the supply side. However, benchmarks erased all the gains to turn negative in late afternoon session after private report cut India’s FY22 GDP growth estimate by a sharp 0.80 per cent to 9.2 per cent, saying the economic impact of the second wave of infections has been deeper than initially expected. It also mentioned that the slow pace of vaccinations in the country and the rolling lockdowns across many states for the estimate. Besides, domestic ratings agency ICRA has forecasted a 2 percent Gross domestic product (GDP) growth in the fourth quarter of 2020-21 and a 7.3 percent contraction for the full fiscal year. Traders ignored report that India and Israel are implementing the ‘INDO-ISRAEL Agricultural Project Centres of Excellence” and “INDO-ISRAEL Villages of Excellence’. The work program will aim to grow existing Centres of Excellence, establish new centers, increase CoE’s value chain, bring the Centres of Excellence into the self-sufficient mode, and encourage private sector companies and collaboration. Finally, the BSE Sensex fell 14.37 points or 0.03% to 50,637.53, while the CNX Nifty was up by 10.75 points or 0.07% to 15,208.45.

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