Benchmarks to get optimistic start on Tuesday

Indian markets ended higher on Monday as strong June-quarter results by HDFC Bank lifted investors' sentiment, adding to last week’s strong IT earnings releases. Today, the start of session is likely to be optimistic following firm global cues. Traders will be getting encouragement with the preliminary data from early stages of human trials showing that the COVID-19 vaccine candidate being developed by the Oxford University and AstraZeneca is safe, well-tolerated, and immunogenic (capable of inducing an immune response). Some support will come with a labour ministry’s statement that retail inflation for farm and rural workers in June eased to 7.16 per cent and 7 per cent, respectively, as compared to May this year. Also, the India Meteorological Department (IMD) in its latest forecast said rains would pick up in the next few days over north and south India. Traders may take note that Commerce and Industry Minister Piyush Goyal called upon Indian investors to play a greater role in providing funds to domestic start-ups with a view to promote the growth of budding entrepreneurs. Though, there may be some cautiousness due to rising coronavirus cases in the country. With over 36,000 new cases being reported on July 20, the total number of coronavirus cases in India has reached 1,154,917, and the country's Covid-19 death toll has reached 28,099. Market participants may be concerned with External Affairs Minister S Jaishankar’s statement that Free Trade Agreements (FTA) have not served India well, and made a pitch for India to look at opportunities beyond FTAs to bolster its trade ties. There will be some buzz in the telecom stocks as the Supreme Court reserved its order in the adjusted gross revenue (AGR) case. E-commerce stocks will be in focus with Union minister Ram Vilas Paswan’s statement that the new rules for electronic retailers, including mandatory display of 'country of origin' on their products, will come into force by the end of this week, and emphasised that the entities will face penal action for any non-compliance. There will be some reaction in cement stocks with ratings agency Icra’s statement that cement demand is likely to de-grow by up to 25 per cent this fiscal on account of the coronavirus lockdown and subsequent specific restrictions disrupting construction activities. There will be some result announcements to keep the markets in action.

The US markets ended higher on Monday spurred on by a rally in tech stocks and continued optimism about the prospects of a novel coronavirus vaccine being ready for production later this year. Asian markets are trading in green on Tuesday following overnight gains on Wall Street.

Back home, Indian equity indices ended higher on Monday, marking the fourth successive day of gains, shrugging off weak trend in Asian markets and concerns over mounting COVID-19 cases. Markets recaptured their crucial 11,000 (Nifty) and 37,400 (Sensex) levels. Key gauges made an optimistic start and traded with a positive bias throughout session, as sentiments got a boost with Reserve Bank of India (RBI) executive director M Rajeshwar Rao’s statement that future economic policies need to be modified towards supporting the economy, depending on how effects of Coronavirus disease (COVID-19) pandemic play out. Some positivity also came with the Agriculture Ministry’s statement that there has been no impact of COVID-19 pandemic on kharif (summer) sowing as the total area planted to rice and other crops has increased by 21.20% to 691.86 lakh hectare so far in the current season. Separately, the latest data from the Reserve Bank of India (RBI) showed that forex reserves rose $3.1 billion to hit a record high of $516.36 billion for the week ended July 10. However, markets turned volatile and gave up some of gains in late morning session, as some cautiousness came with India Ratings and Research’s (Ind-Ra) report that the government's fiscal deficit is estimated to touch 7.6% in FY21, more than double the Budget Estimate (BE), as the nation spends extra to lessen the impact of the COVID-19 pandemic while facing a shortfall in incomes. But, in the final hour of trade, domestic indices gained traction and settled over a percent higher each, as traders found support with Niti Aayog CEO Amitabh Kant’s statement that clean energy has potential to shore up the Indian economy from the current downturn. He also urged investors to exploit long-term opportunities in the sector. Local investors cheered with World Federation of Direct Selling Associations’ (WFDSA) ‘The Global Direct Selling - 2019 Retail Sales report’ stating that the Indian direct selling industry has recorded sales of $2.47 billion in 2019, reporting a growth of 12.1 percent. This has helped the direct selling industry improve its ranking to the 15th from the earlier 19th a year before. Finally, the BSE Sensex rose 398.85 points or 1.08% to 37,418.99, while the CNX Nifty was up by 120.50 points or 1.11% to 11,022.20.