Benchmarks to open in green amid fall in crude oil prices

Indian markets ended volatile session in green territory on Monday after a private survey showed that activity in India's beleaguered manufacturing sector hit a near eight-year high in January. Today, the start of session is likely to be in green tracking positive leads from global markets coupled with sharp fall in crude oil prices overnight. Investors are looking forward to the Reserve Bank of India’s (RBI) February bi-monthly policy outcome. The central bank’s MPC will begin its three-day meeting today, and will announce its decision on February 6. There are expectations that the central bank to maintain a status quo. Traders will be getting encouragement as the government said the economy is not in recession and India recorded the highest average growth among the G-20 nations during 2014-19. Minister of State for Finance Anurag Thakur said that according to the IMF estimates, India continues to be among the fastest-growing economies in the world and its GDP is estimated to grow at 5.8% in 2020-21 and is further projected to surpass China with a growth rate of 6.5% in 2021-22. Also, terming the Union Budget pragmatic, Niti Aayog CEO Amitabh Kant said the government is determined to take India on a high growth path. He further said if the government will be able to achieve disinvestment target of 2020-21 then the Budget will be very successful. Though, some cautiousness may come with Fitch Ratings’ statement that India is expected to clock a GDP growth of 5.6% in the next financial year, lower than the projection made by the government's Economic Survey, as Budget 2020 has not materially altered its view on the country's growth outlook. Banking stocks will be in focus as RBI’s data showed that banks credit and deposits grew 7.21% and 9.51% to Rs 100.05 lakh crore and Rs 131.26 lakh crore, respectively, in the fortnight ended January 17. There will be some buzz in the infrastructure stocks with Finance Minister Nirmala Sitharaman’s statement that the money raised through disinvestment will be used to develop infrastructure, which will have multiplier effect on the economy and not bridging revenue deficit. Metal stocks will be in focus as Ind-Ra revised its outlook on the steel sector to stable-to-negative for the remainder of the ongoing fiscal due to sluggish steel demand growth expectations. There will be some reaction in sugar stocks with the Indian Sugar Mills Association’s (ISMA) statement that Indian mills produced 14.1 MT of sugar between October 1 and January 31, down nearly 24% from a year earlier. Also, there will be lots of earnings reaction based on the performance of the companies.

The US markets ended higher on Monday as gains in Amazon and Nike as well as a surprise rebound in US factory activity helped markets attempt a recovery from steep weekly losses. The Asian markets are trading in green on Tuesday following overnight gains on Wall Street.

Back home, Indian equity indices staged rebound from the Union Budget day carnage, with Sensex and Nifty ending higher by around 140 and 50 points, respectively. After a cautious opening, indices remained volatile, as rating agency CRISIL in its report expressed concerns over the budget attaining its targets on growth, given the rural boost and thus consumption and revenue realisations, and said that planned budgetary measures are not expected to provide a short-term boost. Anxiety remained among traders, on the back of Moody's statement that India's nominal growth projection and fiscal deficit target for 2020-21 will be challenging to achieve. Despite high volatility, bourses managed to keep their heads above water for the most part of the day, after Indian manufacturing industry saw a solid rise in activities at the start of 2020. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index - a composite single-figure indicator of manufacturing performance -surged to 55.3 in January from 52.7 in December, its highest level in just under eight years. Some support also came with Commerce & Industry Minister Piyush Goyal’s statement that a set of measures announced in the Union Budget for 2020-21 will help boost investment and the country's gross domestic product growth. Finally, the BSE Sensex gained 136.78 points or 0.34% to 39,872.31, while the CNX Nifty was up by 46.05 points or 0.39% to 11,707.90.