Benchmarks likely to make positive start on Tuesday

Indian markets ended higher on Monday with Sensex hitting a fresh closing high of 40,889.23, driven by gains mainly in telecom, metal and auto stocks. Today, the markets are likely to make optimistic start following firm global cues. Traders will be taking some encouragement with the payroll data of Employees’ State Insurance Corporation (ESIC) showing that around 12.23 lakh jobs were created in September as compared to 13.38 lakh in August 2019. As per the report, gross enrolments of new subscribers with the ESIC were 1.49 crore during the entire 2018-19 fiscal. Besides, the Central GST collection so far this fiscal stood at Rs 3.26 lakh crore, which is around half the government’s target for 2019-20. The Budget Estimates for Central Goods and Services Tax (GST) for 2019-20 has been fixed at Rs 6,63,343 crore. Some support will also come with Union Minister Nitin Gadkari’s statement that the government is in the process of launching Digital data-based credit ratings of Micro, Small and Medium Enterprises (MSME), to help entrepreneurs to get bank loans on the basis of these credit ratings. However, there may be some cautiousness as Indian government think tank NITI Aayog cautioned the government that the path to a $5-trillion economy by 2025 is plagued with several hindrances. It added that while the nominal gross domestic product (GDP) growth rate was a mere 8 per cent in the first quarter of this fiscal, it has to be at least 12.4 per cent on an average for achieving that target. Meanwhile, Finance minister Nirmala Sitharaman in Lok Sabha introduced the Taxation Laws (Amendment) Bill, 2019 that seeks to replace the ordinance, issued on September 20, to slash corporate tax rate to 22% without incentives and 15% for new manufacturing entities. There will be some buzz in the banking stocks with Minister of State for Finance Anurag Thakur’s statement that the gross non-performing assets (NPAs) of scheduled commercial banks (SCBs) have declined by nearly Rs 98,000 crore to Rs 9.38 lakh crore by June-end this year. Telecom stocks will be in focus as a report said with the Cabinet allowing telecom operators to defer payments due for airwaves bought via auction until the end of March 2022, a committee of secretaries constituted to look at relief package for the debt-laden and loss-making sector has been wound-up. There will be some reaction energy stocks as the Indian Minister of New and Renewable Energy expressed confidence that the country will overachieve on its target to have 175 gigawatts of renewable energy capacity operational by 2022.

The US markets ended in green on Monday amid increasing expectations that China and the US will reach a so-called phase one trade deal. Asian markets are trading mostly higher on Tuesday amid optimism over US-China trade talks and a fresh wave of merger and acquisition activity.

Back home, bulls made a comeback over Dalal Street on Monday, with the Sensex and the Nifty ending higher by around 1.30% each. The start of the day was firm, after the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) jumped to Rs 76,773 crore at the end of October from Rs 76,611 crore at September-end. Adding some comfort among market participants, a survey by the National Statistical Office (NSO) showed that urban unemployment rate dropped to the lowest level in four quarters at 9.3 per cent during January-March 2019. Extending their earlier gains, key equity benchmarks settled the trading session near their intraday high points, on account of firm cues from European markets. Domestic sentiments got a boost, as the Organisation for Economic Cooperation and Development (OECD) forecasted Indian economy to grow 6.2% in 2020 and further to 6.4% in 2021. Further, investors also remained encouraged, with the Commerce and industry minister Piyush Goyal’s statement that reform momentum towards self-certification, labour laws and environment clearance will boost investment and production. Finally, the BSE Sensex rose 529.82 points or 1.31% to 40,889.23, while the CNX Nifty was up by 159.35 points or 1.34% to 12,073.75.