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Markets likely to get cautious start on Thursday

Indian markets ended at record close on Wednesday, extending gains for the third straight session led by gains in banking, metal and pharma indices. Today, the markets are likely to make cautious start amid mixed global cues. Investors will be looking ahead to the Reserve Bank of India’s (RBI’s) monetary policy meeting outcome on Friday. The Monetary Policy Committee (MPC) of the Reserve Bank is widely expected to keep repo rates on hold at 4 percent. Traders will be concerned as India recorded 12,703 fresh Covid-19 cases of the coronavirus disease (Covid-19). The total number of active cases in the country has fallen to 156,952, while the caseload tally stands at 10,790,909. Globally, nearly 104.9 million people have been infected by the virus. The country continues to be second-most-affected globally, and ranks 18th among worst-hit nations by active cases. There will be some cautiousness with rating agency Moody's statement that India's fiscal deficit projections are higher than expected and slower consolidation will constrain its fiscal strength over the medium term. It also expects India's nominal GDP growth to rise to closer to 17 percent in fiscal 2021, higher than 14.4 percent projected in the Budget. Traders may take note of Commerce secretary Anup Wadhawan’s statement that negotiations over the India-US mini trade deal are ongoing and contentious issues have largely been addressed. Besides, the Finance Ministry has released the 14th installment of Rs 6,000 crore to states to meet the GST compensation shortfall, taking the total amount of fund released so far to Rs 84,000 crore. Till now, 76 per cent of the total estimated GST compensation shortfall has been released to states and 3 UTs. Out of this, an amount of Rs 76,616.16 crore has been released to 23 states and Rs 7,383.84 crore to the 3 UTs with Legislative Assembly (Delhi, J&K, Puducherry). There will be some reaction in aviation stocks as global airlines body IATA said passenger traffic at airports in tier 2 and 3 cities of the country is higher than pre-COVID levels. Power stocks will be in focus amid report that the Ministry of Power will launch a domestic manufacturing programme for critical power and renewable energy equipment at an outlay of Rs 1,500 crore in the coming financial year.

The US markets ended mostly higher on Wednesday after two days of sharp gains while Alphabet Inc's shares headed for their best day in nine months following its strong quarterly results. Asian markets are trading mostly in red on Thursday as a mixed Wall Street session gave investors few immediate reasons to increase their risk positions following the recent social media-driven trading chaos.

Back home, Extending their winning streak to a third consecutive session, Indian equity benchmarks ended at record closing high with gains of around a percent each on Wednesday, as economic recovery hopes, on the back of growth-driven Budget, positive global cues, and healthy FII buying continued to please investors. Markets made cautious start but soon gained traction and traded in fine fettle, as traders took some encouragement with NITI Aayog Vice-Chairman Rajiv Kumar’s statement that the reform measures announced in the budget 2021-22 are aimed at taking India out of the COVID-19-induced downturn and making the country a better destination for private investment, both for domestic and foreign investors. Sentiments remained up-beat as the US-India Strategic and Partnership Forum (USISPF) described Union Budget as bold and visionary, which would launch India’s economy into a growth trajectory. It added that the budget positions India towards its target of a $5 trillion economy. Markets were continuing their rally mood in the afternoon session, as India's services sector expanded for the fourth consecutive month in January as business activities quickened and rising business optimism is set to sustain the growth momentum. The seasonally-adjusted India Services Business Activity Index rose from 52.3 in December to 52.8 in January, pointing to a quicker expansion in output. The index was above the critical 50 mark that separates growth from contraction for the fourth month in a row during January. Additional support also came with trade Promotion Council of India's (TPCI's) Founder Chairman Mohit Singla’s statement that the country's exports, which have recorded a growth of 5.4 percent in January, reflects the trade has been on the path of quick recovery. He said the exports have also recorded positive growth in December 2020 and it is a reflection that Indian products have been sustaining its global demand despite challenges. Finally, the BSE Sensex rose 458.03 points or 0.92% to 50,255.75, while the CNX Nifty was up by 142.10 points or 0.97% to 14,789.95.

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