Benchmarks to make slightly negative start

Indian markets gave up early gains and ended flat on Wednesday as gains in IT stocks were offset by losses in index heavyweights RIL and Bharti Airtel. Today, the markets are likely to get slightly negative start following lackluster cues from Asian peers. Rising coronavirus cases will also impact the sentiments in markets. India has recorded over 32,000 Covid-19 cases in the past 24 hours - its biggest single-day spike yet - to take its total number of coronavirus cases to 970,169. With over 600 deaths on Wednesday, the country's Covid-19 death toll has now reached 24,929. There will be some cautiousness with the Commerce and Industry Ministry’s data showing that contracting for the fourth straight month, India's exports declined by 12.41% to $21.91 billion in June mainly due to drop in shipments of petroleum, textiles, engineering goods, and gems and jewellery items. Imports too plunged 47.59% to $21.11 billion in June, leaving a trade surplus of $0.79 billion, compared to a deficit of $15.28 billion in the same month of the last year. However, some respite may come later in the day as Former RBI Governor Raghuram Rajan said the government should focus on spending on profitable firms, which have been incurring costs but have not earned revenues in the last four months. Some support may come with NITI Aayog CEO’s statement that India is set to make the Public Distribution System location independent to ensure that no one, especially the inter-state migrants, is left behind, citing the One Nation, One Card initiative being implemented by the government as a transformative solution in response to the COVID-19 pandemic. Traders may take note that global rating firm S&P Global applauded the decision of India banks to raise fresh capital stating that the move will provide solidity to the organisations during these rocky times and assist them to withstand the economic slump amid the coronavirus pandemic. There will be some buzz in sugar stocks as a group of ministers, headed by Home Minister Amit Shah, recommended increasing the minimum selling price (MSP) of sugar by Rs 2 to 33 per kg to ensure mills clear the pending cane arrears of around Rs 20,000 crore at the earliest. There will be some reaction in aviation stocks with rating agency Crisil’s statement that curtailed mobility of people due to the Covid-19 pandemic is expected to shrink India's domestic air passenger traffic by 40-45 per cent in FY21. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended higher on Wednesday on the back of positive coronavirus vaccine news and a blowout quarter from Goldman Sachs. Asian markets are trading mostly in red on Thursday as investors await the release of a slew of Chinese economic data expected later in the day.

Back home, Indian stock markets surrendered most of the day's gains to settle on flat note in Wednesday’s volatile session, following an intense selloff in heavyweight Reliance Industries at the fag-end of the session. Key gauges made a magnificent start and traded with strong gains for most part of the day, driven by positive sentiment across global markets on hopes of a COVID-19 vaccine. Traders took encouragement after the Indian Council of Medical Research (ICMR) said that two indigenous vaccine candidates for Covid-19 will enter human trials this month. Sentiments remained up-beat 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. Market participants also took a note of 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. The indices, however, gave up most of their morning gains in final hour of trade, as traders turned cautious with India Ratings and Research’s (Ind-Ra) latest report stating that private sector’s capital expenditure (capex) is set to contract by 20-26 percent in the current financial year (FY21) due to COVID-19 pandemic-led business disruptions. Some concern also came with former RBI governor Raghuram Rajan’s statement that non-performing assets of the banking sector are likely to witness unprecedented increase in the next six months and the sooner the problem is recognised the better it would be. The outbreak of COVID-19 and subsequent lockdown to curb the spread of disease has hit businesses hard and many of them are facing difficulty in servicing debt. Finally, the BSE Sensex rose 18.75 points or 0.05% to 36,051.81, while the CNX Nifty was up by 10.85 points or 0.10% to 10,618.20.