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Markets to get positive start amid firm global cues

Indian markets edged higher to end at record close on Wednesday, snapping two sessions of losses, led by gains in IT and Auto stocks. Today, the markets are likely to get positive start tracking firm global cues. Traders will be taking note of report that India recorded 15,277 fresh cases of the coronavirus disease (Covid-19). The total number of active cases in the country has fallen to 193,650, while the caseload tally stands at 10,611,719. However, market participants may be concerned with ratings agency Crisil’s report that the Covid pandemic-induced lockdown and consequent slump in economic activity will hit tax collections of states and result in a near four-fold expansion in their revenue deficits this fiscal, year-on-year. There may be some cautiousness with Fitch Ratings’ statement that India’s medium-term growth potential is at around 6.5% but weak implementation of reforms, combined with continued financial sector problems, could lower its potential. It said the revival of the reform agenda is among the Indian government’s policy responses to the Covid pandemic shock. Real estate industry stocks will be in focus with a private report stating that housing sales rose 25 per cent year-on-year during the October-December period at 1,10,811 units across seven cities on pent up and festive demand. There will be some reaction in power stocks with Power Secretary S N Sahai’s statement that all-India power demand on Wednesday morning touched a record high of 185.82 gigawatts (GW). On December 30, 2020, all-India power demand had touched 182.89 GW. There will be some buzz in insurance industry stocks with Moody’s report that Indian insurance companies are likely to withstand the economic downturn exacerbated by the coronavirus pandemic, with general insurance premium growth in positive territory. MSMEs stocks will be in limelight with the finance ministry’s statement that banks have sanctioned an additional Rs 15,571 crore under the Emergency Credit Line Guarantee Scheme (ECLGS) to MSMEs that were impacted by the coronavirus pandemic. Meanwhile, Home First Finance IPO will open for subscription today. The firm on Wednesday raised a little over Rs 346 crore from anchor investors. The company has fixed a price band of Rs 517-518 a share for its initial share-sale. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets closed at record highs on Wednesday as investors grew optimistic that recent federal spending will revive growth and bolster corporate earnings. Asian markets are trading higher on Thursday after stocks on Wall Street sailed to record highs as US President Joe Biden was sworn into office.

Back home, Extending their bull run for second straight day, Indian equity benchmarks ended the Wednesday’s trade above their crucial 49,700 (Sensex) and 14,600 (Nifty). Markets started the session on optimistic note as traders took support from report that investment through participatory notes (P-notes) in the domestic capital market rose to a 31-month high of Rs 87,132 crore at December-end, reflecting the bullish stance of FPIs. Traders took note of NITI Aayog member, Dr VK Paul said that concerns related to health issues post-vaccination were 'insignificant, unfounded, and negligible. He said, as per the data seen so far, the vaccines are safe and this is a reassuring situation. Traders also took some support with Union Minister Piyush Goyal’s statement that Logistics team in the Ministry of Commerce and Industry is trying to integrate various means of transport, documentation & stakeholders through technology platforms, into a much-simplified way of working, which will enhance the Ease of Doing Business. Besides, Goyal said that this will truly give confidence to business community & stakeholders in logistics that Center & States are working as team. Markets extended gains in second half of the trade to end near intraday highs, as markets regulator SEBI extended relaxations for companies with regards to compliance with procedural norms pertaining to rights issues opening till March 31 amid the ongoing coronavirus pandemic. Earlier, this relaxation was given for rights issues opening till July 31, 2020, which was further extended till December 31, 2020. Sentiments also remained upbeat with report stating that the ongoing key reforms such as sops for manufacturing, easier labour laws, wooing FDI inflows and privatisation will help improve productivity and support long-term growth at 7.5-8 per cent levels, which if played out well, can help India contribute 15 per cent of global GDP growth by FY2026. Finally, the BSE Sensex soared 393.83 points or 0.80% to 49,792.12, while the CNX Nifty was up by 123.55 points or 0.85% to 14,644.70.

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