IGI Logo

Markets likely to make negative start on Wednesday

Indian markets ended higher on Tuesday, to recoup most of the losses in the past two days, led by sharp gains in realty, metals and IT stocks. Today, the start of session is likely to be negative following a weak trend in the global peers. Traders will be concerned as the Organisation for Economic Co-operation and Development (OECD) cut its projection of India's economic growth by 0.2 percentage points to 9.7 per cent for the current financial year. Some pessimism may come as India recorded a spike of 27,333 new Covid-19 cases in the past 24 hours. The country also witnessed 385 deaths, taking the death toll to 445,801. There will be some cautiousness with a private report that retail depositors are earning negative returns on their bank deposits and hence, there is a need for reviewing taxes on interest earned. However, some support may come with report that foreign institutional investors have been bullish on Indian shares for much of 2021 so far, net offloading only in April, May and July. As of Monday, FIIs have invested a net Rs 64,202 crore in Indian equities so far this year. That is more than double the net purchases of Rs 28,347 crore in the first nine months of 2020. Traders may take note of report that as some taxpayers faced difficulties in filing GST return, the tax department has said the IT grievance redressal committee would consider giving interest and late fee waiver. There will be some buzz in the agriculture industry stocks as the agriculture ministry said India's foodgrain production is likely to touch record 150.50 million tonne in the ongoing kharif season on better rice output amid good monsoon. Telecom stocks will be in focus as the government is actively considering allowing adjusted gross revenue (AGR) moratorium through legislation. In September 2020, the Supreme Court in a judgment had said that the amount payable needed to be coughed up in 10 instalments ending 2031. There will be some reaction in power stocks with report that India has added 521 MW of rooftop solar capacity in April-June this year, which is the highest capacity installed in a quarter. Meanwhile, Puranik Builders has filed preliminary papers with capital markets regulator SEBI launch an initial public offering (IPO). The issue comprises fresh issue of shares worth Rs 510 crore and an offer for sale (OFS) up to 9.45lakh equity shares by the company’s promoters group.

The US markets ended mostly lower on Tuesday after a broad sell-off the day before, with worries over troubles at developer China Evergrande and caution ahead of Wednesday's Federal Reserve policy news keeping a lid on the market. Asian markets are trading mixed on Wednesday amid lingering nerves about the fallout from a looming failure at developer China Evergrande and anticipation the Federal Reserve may move a step closer to tapering.

Back home, Indian equity benchmarks staged a strong recovery in the dying hours of trade to end comfortably in the green on Tuesday, on account of buying in Realty, Metal, Basic Materials and IT stocks. Key gauges traded on a volatile note for the first half of the trading session, as traders remained wary with ICRA Ratings’ report that with the benefits of unlocking measures tapering out, the performance of the high-frequency indicators have become ‘uneven’ since August 2021 especially when compared to the pre-COVID levels. It appears that the temporary boost, provided by the easing of state-wise restrictions after the second wave of COVID-19 ebbed, petered out. Traders also took a note of RBI Deputy Governor M Rajeshwar Rao’s statement that there is a need to mainstream green finance and devise ways for incorporating environment impact into commercial lending decisions. He said addressing climate risk in the financial sector should be the joint responsibility of stakeholders as it would affect the resilience of the financial system in the long run. However, benchmark indices stabilized in the late afternoon trade, logging a smart rebound post two-days of selling, buoyed by a recovery in overseas markets.  Traders found some support with private report stating that investors have been pouring money into India’s stock market, and it could grow to more than $5 trillion to become the fifth largest in the world within three years. It added Indian start-ups have raised $10 billion through IPOs so far this year - more money than was raised in the last three years. Some solace also came with Apex exporters' body Federation of Indian Export Organisations (FIEO) said it will focus on new products and markets for diversification with a view to boosting the country's outbound shipments.  Adding to the optimism, Retirement fund body, Employees' Provident Fund Organisation (EPFO) in its latest Provisional Estimate of Net Payroll data report has showed that India created 1464782 new jobs in the month of July 2021. Sector wise, sugar sector remains in focused, as the Centre has so far cleared Rs 1,800 crore in subsidy to sugar mills for undertaking a mandated export of 6 million tonnes of the sweetener in the 2020-21 season-ending this month. Finally, the BSE Sensex rose 514.34 points or 0.88% to 59,005.27 and the CNX Nifty was up by 165.10 points or 0.95% to 17,562.00.  

Above views are of the author and not of the website kindly read disclaimer