Benchmarks to make cautious start on Wednesday

Indian markets ended higher with gains of over a percent on Tuesday, amid hopes of policy easing by major central banks of the world to address the economic fallout from the spreading coronavirus. Today, the markets are likely to get a cautious start amid mixed cues from Asian peers and ahead of India Service PMI numbers for February to be released later in the day. Traders will be concerned with the government data showing that foreign direct investment (FDI) into India dipped marginally by 1.4% to $10.67 billion (about Rs 76,800 crore) during October-December period of 2019-20. Inflow of FDI during October-December of 2018-19 stood at $10.82 billion. Though, some encouragement may come later in the day as the Reserve Bank of India (RBI) said it stands ready to safeguard the country’s banking system from financial and market risks stemming from the spread of Covid-19, citing expectations of coordinated policy action by central banks around the world amid threats to global demand and currency movements. Some support may also come as Minister of State for Agriculture Kailash Chaudhary expressed confidence of achieving the target of doubling farmers income by 2022. Traders may take note of report that the government has collected over Rs 7.52 lakh crore as direct taxes till January 31 of the current fiscal. Meanwhile, Finance minister Nirmala Sitharaman has introduced the Banking Regulation Amendment Bill in the Lok Sabha. There will be some buzz in the auto stocks as parliamentary panel suggested a lower GST rate for the automobile segment at least till the revival of the sector and uniform road tax across all states against the backdrop of negative growth in the automobile production since July 2018. Sugar stocks will be in limelight as the government said the country's total sugar production is estimated to decline by 18 percent to 27.3 MT in the ongoing 2019-20 season on fall in sugarcane output in key growing states. There will be some reaction in Cement stocks with ICRA’s statement that the domestic cement industry’s capacity utilisation is likely to moderate in FY20 to sub-70% levels. It added that the demand revival trend witnessed in recent months is likely to continue in the fourth quarter of FY20.

The US markets ended lower on Tuesday after the Federal Reserve cut interest rates in an emergency move to shield the US economy from the impact of the coronavirus. Asian markets are trading mixed in early deals on Wednesday following sell-off on Wall Street overnight.

Back home, Indian equity markets snapped seven days losing streak on Tuesday, with Sensex and Nifty ending higher, after the Reserve Bank of India (RBI) said it is closely monitoring global as well as domestic situation regarding the impact of deadly coronavirus and ready to take necessary action to ensure orderly functioning of financial markets. After a fabulous start, indices remained in green, aided with Union Finance Minister Nirmala Sitharaman’s statement that the direct tax dispute resolution scheme announced in Budget will be of great help to people as they will be able to save time and money spent in fighting cases. However, volatility hit over the markets during the afternoon deals, after the Organisation for Economic Cooperation and Development (OECD) lowered India’s GDP growth forecast to 5.1%, from its earlier projection of 6.2%, for FY21 on concerns over the impact of deadly coronavirus on the domestic as well as the global economy. But, key benchmarks again gained the traction in the last hours of the trading session, after the Finance Ministry said that women account for over 81 per cent of the total beneficiaries under the Stand Up India scheme with loans worth Rs 16,712 crore sanctioned for them in nearly 4 years time. Finally, the BSE Sensex gained 479.68 points or 1.26% to 38,623.70, while the CNX Nifty was up by 170.55 points or 1.53% to 11,303.30.