Benchmarks to make positive start on Thursday

Indian markets ended higher with significant gains on Wednesday, after a survey showed the pace of contraction in India's manufacturing sector slowed further in June. Today, the markets are likely to make positive start following gains in Asian peers. Traders will be taking encouragement with Finance minister Nirmala Sitharaman’s statement that the government is committed to undertaking refo­rms to make the tax administration simple for businesses, particularly the micro, small and medium enterprises (MSMEs). Traders may take note that traders' body CAIT suggested a host of measures, like technical audits and waiver of late fees, to broaden the GST base and make the taxation system simple. However, there may be some cautiousness with over 19,000 cases being reported in the last 24 hours, India's total tally of coronavirus cases has crossed the 600,000 mark. At present, the country has 605,220 cases, of which 17,840 are fatalities. Traders may also be concerned as the International Labour Organisation (ILO) has warned that if another Covid-19 wave hits in the second half of 2020, there would be global working-hour loss of 11.9 per cent - equivalent to the loss of 340 million full-time jobs. Meanwhile, SEBI came out with a set of standard operating procedures for stock exchanges, clearing corporations and depositories to deal with possible defaults by trading or clearing members. The framework, which will come into force from August 1, is aimed at protecting the interest of non-defaulting clients of trading members or clearing members in the likely event of default by trading member or clearing member. There will be some buzz in the metal stocks as the government assured steel makers that it will take appropriate measures to reduce the logistics cost of products that currently reaches as high as 28 percent. Banking stocks will be in focus with Fitch Ratings’ report that Indian banks may continue to face heightened asset quality and earning pressure for at least two years, as disruption to business activity and supply chains and shrinking personal incomes damage banks' balance sheets.

The US markets ended mostly higher on Wednesday after drug giant Pfizer and German biotech company BioNTech announced positive data from an early-stage human trial of a potential coronavirus vaccine. Asian markets are trading in green on Thursday following positive news overnight around the development of a potential coronavirus vaccine.

Back home, Indian equity benchmarks have showcased a strong performance on Wednesday, by gaining over a percent in the session and settling above the psychological 10,400 (Nifty) and 35,400 (Sensex) levels. After making a cautious start, markets gained traction and traded in fine fettle, as the data released by the Reserve Bank of India (RBI) showed that India's current account balance recorded a marginal surplus in the January-March quarter of FY20. Traders also took note of the Reserve Bank of India’s data showing that direct investment into the country rose by $19 billion during 2019-20. Sentiments remained optimistic with Union Minister Nitin Gadkari’s statement that the government is looking at ways to boost India's exports. He is also hopeful that a solution will be found in the next 4-6 months to address the issue of delay in payment to micro, small and medium enterprises. Benchmark indices gained more strength in late afternoon session, as investors’ morale remained upbeat with Niti Aayog Vice Chairman Rajiv Kumar’s statement that India's economy will recover following the containment of COVID-19 pandemic, and ongoing reforms would keep the country's growth rate ahead of peers. The market participants overlooked weak economic data. The growth of eight core infrastructure industries has contracted by 23.4 percent in May 2020 as compared to same period of last year, due to the coronavirus-induced lockdown.  Traders also paid no heed towards Fitch Ratings in its June update of Global Economic Outlook lowered India's growth forecast for financial year 2021-22 to 8 percent from 9.5 percent projected last month. However, the rating agency retained its projection of Indian economy contracting by 5 percent in the current fiscal (FY21).  It projected Indian economy to grow 5.5 percent in 2022-23. Finally, the BSE Sensex gained 498.65 points or 1.43% to 35,414.45, while the CNX Nifty was up by 127.95 points or 1.24% to 10,430.05.