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Indian markets extended the rally on Tuesday, as positive global cues, coupled with reports of China further relaxing its pandemic-related restrictions boosted sentiment. Today, the markets are likely to get pessimistic start amid lackluster global cues, subdued foreign flows, and rising crude oil prices. Foreign institutional investors (FIIs) sold shares worth Rs 867.65 crore on December 27, according to the provisional data available on the NSE. There will be some cautiousness as the latest data on public debt showed that the total liabilities of the government increased to Rs 147.19 lakh crore at September-end from Rs 145.72 lakh crore at the end of June this fiscal year. In percentage terms, it reflects a quarter-on-quarter increase of 1 per cent in second quarter of 2022-23. Banking stocks will be in limelight as the RBI in the 'Trends and Progress of Banking in India' report for FY22 said the GNPAs, which touched a peak in FY18 following the asset quality review, have been declining sequentially to reach 5 per cent in September. There will be some buzz in pharma stocks with a private report that after recording 7 per cent growth last fiscal, the pharmaceuticals industry is projected to grow 9-11 per cent in this and next fiscal years. This will be led by steady domestic demand following price hikes across key therapy areas. Airbags industry stocks will be in focus as ratings agency Icra said the industry size of airbags, a key safety feature in vehicles, is expected to grow to up to Rs 7,000 crore by FY2027 in India, from the current levels of around Rs 2,500 crore. There will be some reaction in road sector stocks as credit rating agency Crisil said aided by regulatory guardrails and structural benefits, infrastructure investment trusts (InvITs) in the road sector have enhanced the credit quality of around Rs 46,000 crore debt till now. According to Crisil, since 2016, 19 InvITs have been registered in India and these include 11 from the roads sector of which nine have been floated or are set to be launched soon.

The US markets ended mostly lower on Tuesday as trading resumed following the long Christmas weekend. Asian markets are trading mostly in red on Wednesday with investors looking for direction after China took further steps towards reopening its COVID-battered economy.

Back home, Indian equity benchmarks ended higher for the second consecutive session with gains of over half percent on Tuesday as positive global cues, coupled with reports of China further relaxing its pandemic-related restrictions boosted sentiment. After a positive start, markets witnessed volatility as traders were cautious on a private report that a sustained surge in Covid cases in China could further exacerbate a contraction in India’s exports to its fourth-largest market in the coming months, as order flow has already been faltering at a steady pace. Street now forecast a 40-45% crash in exports to China this fiscal from $21.3 billion in FY22 if the Covid surge continues through January. However, key gauges soon gained strength in late morning deals, as traders turned optimistic with a private report stating that India is well positioned to continue to be the fastest-growing major economy next year, which may mark the lowest global growth since the millennium began barring the pandemic and the global financial crisis. Markets extended gains in the second half to close the session near the day's high, taking support from Secretary in Department for Promotion of Industry and Internal Trade (DPIIT) Anurag Jain’s statement that India has the third largest startup ecosystem in the world and the way startups here are performing; soon the country will become a top ecosystem globally. He also said that the country's startups will attract significant foreign direct investments (FDI) in 2023 on account of steps being taken by the government to strengthen the ecosystem for budding entrepreneurs. Traders overlooked report that credit rating agency, India Ratings and Research (Ind-Ra) in its ‘December Credit Market Tracker’ has forecasted that the core inflation is likely to remain elevated in the remaining FY23, given that there is a pending pass-through of higher input costs by producers and a continued robust demand in the economy. Finally, the BSE Sensex rose 361.01 points or 0.60% to 60,927.43 and the CNX Nifty was up by 117.70 points or 0.65% to 18,132.30.