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Indian equity markets ended higher with gains of over one percent on Monday led by Utilities, PSU and power stocks. Today, markets are likely to make optimistic start amid positive cues from other Asian markets on hopes of demand recovery in China after the country announced it will ease its strict COVID-19 restrictions. Traders may get support with private report 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. Some support may also come with reports that Gross direct tax collections for 2022-23 (up to November 30) are up by 29.66 per cent at Rs 10,93,385 crore, which was over Rs 8,43,301 crore collected during the corresponding period of last year. The growth has been achieved due to the performance of economy, administration and implementation of the provisions of the direct tax laws. However, traders may be cautious on 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. There will be some buzz in coal related stocks as the Coal Consumers Association of India (CCAI) has made a plea to the government to resume rake-based supplies to the non-power sector in a bid to maintain cost competitiveness and sustain operations. There may be some reaction in textiles stocks as the government said that the Rs 10,683-crore production-linked incentive scheme for India's textiles sector attracted investments of Rs 1,536 crore as approval letters were issued to 56 applicants who met the eligibility criteria.

The US markets were closed on Monday on account of Christmas holiday. Asian markets are trading in green amid China relaxes Covid-19 restrictions as the country cancels quarantine rules for travelers. The infection has been downgraded to Category A and Category B. New rules will come into effect from January 8, 2023.

Back home, Indian equity benchmarks witnessed a strong recovery after a four-day selloff and settled with gains of over a percent each on Monday amid a positive trend in global markets. After making a cautious start, frontline indices soon gained strength. Some optimism came as a report stated that foreign investors have infused a net Rs 11,557 crore in Indian equities in December so far despite a market correction and increasing concerns over re-emergence of COVID in China and some other parts of the world. Some support also came as Department for Promotion of Industry and Internal Trade (DPIIT) has sought the views of 16 departments and ministries on its draft national retail trade policy, which is aimed at the overall development of all formats of the sector. Key gauges extended gains in afternoon deals, as domestic sentiments remained up-beat with the Centre for Economics and Business Research (Cebr) stating that India's growth trajectory will see the country rise from fifth place on the World Economic League Table in 2022 to third in the global rankings by 2037. However, markets came off day’s high points, as some profit booking in the last half an hour trimmed some gains. Traders took a note of a private report that India's exports may have touched an all-time high of USD 422 billion in 2021-22 but recession in key western markets and geo-political crisis due to the Russia-Ukraine war are expected to impact the growth of the country's outbound shipments in 2023. Finally, the BSE Sensex rose 721.13 points or 1.20% to 60,566.42 and the CNX Nifty was up by 207.80 points or 1.17% to 18,014.60.