Benchmarks to start session in red amid surge in cases of coronavirus

Indian markets ended higher for the fourth straight session on Monday even as the country grappled to contain the rising number of coronavirus cases. Today, the start of session is likely to be pessimistic following mixed cues from Asian peers amid a surge in cases of coronavirus. Once again, India has witnessed a massive spike in the number of coronavirus cases. With over 22,000 new cases in a day, the tally has hit 720,346 and 20,174 people have died. There will be some cautiousness as India Ratings and Research in its report said that the COVID-19 pandemic will result in Rs 1.67 lakh crore of debt owed by top-500 corporates turning delinquent by March 2022. This will take the cumulative quantum of delinquencies to Rs 4.21 lakh crore or about 11 percent of overall debt. However, some respite may come later in the day as the Ministry of Finance asserted that green shoots have started to emerge in the domestic economy. In its monthly macroeconomic report, the ministry highlighted that total digital retail financial transactions via NPCI platforms rose sharply from Rs 6.71 lakh crore in April to Rs 9.65 lakh crore in May, a sign of revival in economic activity. Some support may also come with a Ficci-Dhruva Advisors industry survey report stating that the opening up of India's economy post lockdown and implementation of the economic package unveiled by the government have started showing results on the ground with initial signs of improvement in the performance of businesses now visible. Meanwhile, the Finance Ministry has said the government is not considering any proposal to merge the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC). IT stocks will be in focus with rating agency CRISIL’s report that the H-1B visa ban could have an impact of nearly Rs 1,200 crore on Indian IT companies. It added that this could mean a marginal impact of 0.25-0.30 percent on their profitability. There will be some reaction in sugar stocks with the All India Sugar Trade Association’s statement that Indian mills have contracted to export 5.2 million tonnes of sugar since the current season began on October 1.

The US markets settled sharply higher on Monday as traders remain optimistic about the US economic outlook following last Thursday's better than expected jobs data. Asian markets are trading mixed on Tuesday as investors await the Reserve Bank of Australia’s interest rate decision.

Back home, Indian equity indices carried forward their northbound journey for the fourth straight session on Monday, as optimistic cues from across the globe helped the indices to surpass crucial support levels of 10,750 (Nifty) and 36,450 (Sensex). Markets made an optimistic start and traded with a positive bias throughout session, as sentiments got a boost with Commerce and Industry Minister Piyush Goyal’s statement the country's exports, after contracting drastically in April and May due to the COVID-19 pandemic, are ‘recovering fast’ and it will be reflected in the data for June. Some positivity also came with a report stated that in the fourth years of the goods and service tax (GST) regime, the government is determined to focus on the simplification of tax administration and ease of compliance for taxpayers. Key gauges extended gains in late afternoon trading, as traders remained optimistic with a report that farm activity has seen an uptick in June, aided by heavy rainfall, with 87% more area coming under cultivation of various key crops so far in the season compared to last year. Traders also found support with report that promoters of stressed companies will get more flexibility in attracting investors and the process of determining the right price for assets would get easier following a new set of amendments introduced by capital market regulator Sebi in its preferential share issuance norms. However, markets gave up some of their gains in late trade, as some anxiety remained among traders with ICRA’s report that the states' combined market borrowings as state development loans (SDL) have doubled to Rs 1.7 lakh crore during Q1 (April-June) of FY 2020-21 from Rs 0.8 lakh crore in same quarter of the previous fiscal year, on account of expenditure to fight Coronavirus disease (COVID-19) pandemic and lower tax realisation due to multiple lockdown extensions. Finally, the BSE Sensex gained 465.86 points or 1.29% to 36,487.28, while the CNX Nifty was up by 156.30 points or 1.47% to 10,763.65.