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Markets likely to get cautious start ahead of RBI’s policy outcome

Indian equity benchmarks ended volatile session in green terrain on Tuesday. Today, the start of session is likely to be cautious ahead of the Reserve Bank of India’s (RBI) monetary policy outcome later today. Reserve Bank of India (RBI) will present its first bi-monthly policy for 2021-22 on April 7, 2021. The announcements by RBI today will set the direction for monetary policy for the new financial year. Traders will be concerned as India has recorded a massive surge of 115,269 Covid-19 cases in the last 24 hours. With this, India has seen the biggest-ever daily surge, taking the tally to 12,799,746, Worldometer showed. Active cases have crossed the 800,000-mark and now stand at 843,779. India is now the 4th-worst hit country in terms of active cases. India also witnessed a grim record of second-most fatalities due to covid-19 in a single day in 2021, which stood at 631. The death toll from the deadly infection stands at 166,208. Maharashtra reported over 55,000 Covid-19 cases in the last 24 hours in a persistent rise in cases, while Delhi witnessed 5,100 fresh cases. However, some recovery may be expected in latter trade on report that the International Monetary Fund (IMF) has raised its projection for India’s economic growth in the current financial year by one percentage point to 12.5 per cent. The forecast, published in the IMF’s World Economic Outlook, suggests India would again become the fastest-growing large economy in the world. In fact, India is the only country among major world economies that is projected to grow at a double-digit rate during FY22. China comes closest, with a forecast of 8.4 per cent economic expansion. Meanwhile, Central Board of Direct Taxes (CBDT) chairman PC Mody said that the Centre’s tax resolution scheme Vivad Se Vishwas has resolved nearly a third of all direct tax disputes and has netted Rs 54,005 crore in tax revenue, 51% of which are from the central PSUs. Cement stocks will keep buzzing as Icra said domestic cement demand is expected to be highest in the decade, estimated to surpass 340 million tonne in FY2022, driven by sustained rural housing demand and significant pick-up in infrastructure activity. On the supply side, the capacity addition is also expected to increase by 22-25 million tonne in FY2022. There will be some buzz in Aviation stocks as ratings agency Icra said that India's domestic passenger traffic slipped to a 10-year low at an estimated 53.4 million in the just-concluded financial year. However, in the previous fiscal there were no passenger flight operations for almost two months due to the pandemic-induced lockdown.

Asian markets were trading mostly higher on Wednesday as more growth data was reported, including IMF’s revised forecast on global economic recovery. However, the US markets ended lower on Tuesday a day after notching all-time highs on signs of rapid economic recovery.

Back home, Indian benchmark indices ended marginally higher after a volatile trade on Tuesday led by gains in Healthcare, Industrials and Basic Materials stocks. After making cautious start, benchmark indices traded higher with gains of over half a percent in morning deals, as sentiments got boost with data showing that India has attracted record total FDI inflow for the first ten months of a financial year in 2020-21. Accordingly, the inflow rose to $72.12 billion during April to January, 2021, 15 per cent higher as compared to the first ten months of 2019-20, when it stood at $62.72 billion. The FDI equity inflow grew by 28 per cent in the first ten months of FY 2020-21 ($54.18 billion) compared to the year ago period ($42.34 billion). Some support also came in as the country witnesses a rapid resurgence of coronavirus cases, a Finance Ministry report has exuded confidence in the Indian economy and termed the economic recovery as resilient citing improvement in high frequency indicators. The Monthly Economic Review for March 2021 released by the Department of Economic Affairs (DEA) said that the agricultural sector remains the bright spot of Indian economy with foodgrains production touching 303.3 million tonnes in 2020-21 beating record production levels for the fifth consecutive year in a row. However, key gauges were unable to sustain most of the gains by the end of the trade, as traders remine concerned with Care Ratings’ statement that Maharashtra’s radical lockdown move will have an economic impact of Rs 40,000 crore, with the trade, hotels and transport sector to bear the biggest dent. The rating agency said the loss of economic activity will have a 0.32 per cent impact on the gross value added (GVA) growth at the national level. It revised down its national GDP growth estimate to 10.7 - 10.9 per cent from the 11 - 11.2 per cent given a week ago. Some concern also came with ICRA Ratings’ report stated that as the impact of various relief measures, including a moratorium on loan repayment and asset classification standstill wanes off, gross non-performing assets of banks may likely rise to 9.6-9.7 per cent by March 31, 2021. Finally, the BSE Sensex rose 42.07 points or 0.09% to 49,201.39, while the CNX Nifty was up by 45.70 points or 0.31% to 14,683.50.  

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