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Markets likely to make flat-to-positive start on Tuesday

Indian markets recovered from the day's lows and closed marginally lower Monday amid weak global cues. Today, the markets are likely to make flat-to-positive start tracking overnight gains on Wall Street. Traders will be taking encouragement as FICCI's latest quarterly survey on manufacturing assessed recovery of the sector for Q-3 (October-December 2020-21) and pointed that it is expected to regain the lost momentum in the Q-4. The percentage of respondents reporting higher production in the third quarter of 2020-21 had increased vis-a-vis the Q-2 of 2020-21. The proportion of respondents reporting higher output during October-December 2020 rose to 33 per cent, as compared to 24 per cent in Q-2 of 2020-21. However, traders may be concerned as India reported 40,611 the daily number of Covid-19 cases. The overall tally stands at 11,686,330, according to Worldometer. The death toll from the infection is at 160,200. Maharashtra recorded 24,645 new cases. Meanwhile, Delhi saw as many as 888 fresh coronavirus cases on Monday. There may be some cautiousness with a private report that the pandemic-induced shocks to the economy which have already shaved off 15.7 per cent of the GDP from the previous year, will delay the ambitious target of becoming the third largest economy by three years to 2031-32 now. Meanwhile, Finance Minister Nirmala Sitharaman on Monday introduced the National Bank for Financing Infrastructure and Development (NaBFID) Bill 2021 in the Lok Sabha to pave the way for setting up of a government-owned development finance institution to help fund about 7,000 infra projects under the National Infrastructure Pipeline. Banking stocks will be in focus as the Supreme Court of India gears up to pronounce the verdict on various pleas that seek an extension of the loan moratorium that was announced almost a year ago. The pleas before the apex court are from various trader associations. Earlier the government had informed the court that if the interest on all loans and advances was to be waived the amount lost would be close to Rs 6 lakh crore. There will be some reaction in logistic stocks as India Ratings and Research (Ind-Ra) said that India’s logistics sector looks stable in financial year 2021-22 as a recovering economy builds demand, citing the commissioning of a dedicated freight corridor.

The US markets ended higher on Monday as technology stocks rebounded from a recent selloff sparked by surging bond yields. Asian markets are trading mixed on Tuesday as bond yields continue to keep markets on the edge.

Back home, Indian equity benchmarks closed in the negative on Monday but staged a strong rebound from the lows. Markets made a negative start, tracking losses in index majors Indusind Bank, Power Grid, ICICI Bank and HDFC Bank amid a weak trend in global markets. Sentiments remained down-beat with report that the International Monetary Fund pointed to emerging signs of a stronger global economic recovery, but warned that significant risks remained, including the emergence of mutations of the coronavirus. Selling further crept in with the latest data from the Reserve Bank showed that as the year-long pandemic left households more indebted, which has sharply jumped to 37.1 percent of GDP in Q2 of FY21, while their savings rate plunged to a low 10.4 percent. The household savings plunged as the pandemic has led to tens of millions losing jobs and almost all forced to take deep pay-cuts, forcing them to borrow more or dip into their savings to meet expenses.  Mounting concerns pertaining to rise in COVID-19 cases in various parts of the country and resultant restrictions continued to weigh on investors sentiments. However, late buying in Realty, IT, FMCG and TECK shares helped benchmarks recover from intraday lows. Traders also found some support with Aayog Vice Chairman Rajiv Kumar’s statement that India needs to grow at 10.5-11 percent in real terms in FY22 and then sustain that to overcome massive ill-effects of the COVID-19 pandemic. Some support also came with Sebi data showing that investments through participatory notes (P-notes) in the Indian capital market rose to Rs 91,658 crore at February-end, making it the highest level in 33 months, suggesting growing confidence of overseas investors. Traders also took a note of the article on the 'State of Economy' written by RBI Deputy Governor M D Patra and other officials stated that amid ominous signs of a possible second wave of COVID-19, the country needs to speed up vaccination drive. Finally, the BSE Sensex fell 86.95 points or 0.17% to 49,771.29, while the CNX Nifty was down by 7.60 points or 0.05% to 14,736.40. 

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