Markets likely to open higher following positive global cues

Indian markets ended lower on Tuesday on weak global cues as rising coronavirus cases weighed on investors’ sentiment. Today, the markets are likely to open higher following overnight gains on Wall Street and positive cues from Asian peers. Traders will be taking encouragement with Former Reserve Bank Governor D Subbarao’s statement that the government needs to build on some silver linings in the farm sector, driven by the prospect of a favourable monsoon, to speed up the economic recovery. Some support will come with Commerce and Industry Minister Piyush Goyal’s statement that the government is working on creating a genuine single window clearance mechanism and mapping the entire land bank available for the industry and industrial development. Traders may take note of a private report stating that the RBI to slash up to 75 bps -- 25 bps on August 6 and another 50 bps in October, if the COVID-19 is brought under control by October. Besides, the government has extended the due date for filing annual return by composition dealers for 2019-20 till August 31. However, rising coronavirus cases may impact the markets. India has recorded nearly 29,000 Covid-19 cases in the past 24 hours, taking its total number of Covid-19 cases to 937,487. With over 550 deaths on Tuesday, the country's death toll has now reached 24,315. Meanwhile, SEBI has extended the deadline till August 15 for sending public comments on a report on social stock exchange which allows for direct listing of non-profit organisations. Auto stocks will be in focus with SIAM’s statement that India's auto sales volume will take another 3-4 years to reach 2018 levels, as the coronavirus-induced lockdown hurt monthly revenue and increased pressure on a sector already reeling from poor demand. There will be some reaction in insurance stocks as IRDAI asked insurers to give 5% discount on Corona Kavach premium to doctors and health workers, and ensure that hospitals do not deny cashless treatment to insured persons in conformity with the terms of policy.

The US markets ended higher on Tuesday as investors bought energy and materials stocks and looked beyond a recent surge in coronavirus cases. Asian markets are trading mostly in green on Wednesday as optimism about a coronavirus vaccine bolstered risk appetite.

Back home, Tuesday turned out to be disappointing session for the Indian equity indices which got pounded by around two percent, on the back of weak global cues, and concerns with regard to rising Covid-19. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 36,050 (Sensex) and 10,650 (Nifty). The sentiments weighed down by private report stated that a longer wait for a vaccine against the COVID-19 virus may lead to a contraction of up to 7.5 percent in the Indian GDP in FY21. It also revised down their base case estimates on the real GDP within a week, and now expect it to contract by 4 percent because of a drop in economic activity. The sentiments remained on pessimistic note reacting to Consumer Price Index (CPI) data, which increased to 6.09% in June 2020, mainly on account of higher prices of food items. The CPI was 3.18% in June 2019. Domestic markets extended their losses in late afternoon session, amid a private report stating that net inflows in equities plunged 94 per cent month-on-month in June. It said increase in redemptions by 74.9 per cent month-on-month to Rs 14,200 crore led to a decline in net inflows in equities from Rs 5,600 crore in the previous month to Rs 300 crore in June, the lowest in four years. Markets participants also took a note of reports that India’s inflation based on wholesale price index (WPI) stood at -1.81% in the month of June as compared to 2.02% during the corresponding month of the previous year. Fuel & Power index, having weight of 13.15%, increased by (5.50%) to 88.3 (provisional) in June 2020 from 83.7 (provisional) for the month of May, 2020. Prices of mineral oils group increased compared to month of May, 2020, while prices of coal and electricity remain unchanged. Market participants largely overlooked Niti Aayog Vice Chairman Rajiv Kumar’s statement that there is a need to translate the coronavirus-led pandemic situation into an opportunity to meet the sustainable development goals. Finally, the BSE Sensex fell 660.63 points or 1.80% to 36,033.06, while the CNX Nifty was down by 195.35 points or 1.81% to 10,607.35.