Markets likely to get flat-to-positive start

Indian markets ended higher for a fifth straight session on Tuesday, led by financials, auto and energy stocks. Today, the markets are likely to get flat-to-positive start amid supportive global cues. Traders will be getting encouragement as asserting that green shoots are visible, Finance Minister Nirmala Sitharaman has assured the industry that the government is open to taking more actions in future to boost economic recovery. Some support will also come with Union minister for road transport and highways Nitin Gadkari’s statement that the current economic crisis being faced by India is a temporary phase and the country still remains the fastest growing economy in the world, and a favourable investment destination. Traders may take note of a private report that easing of lockdown restrictions, seems to have a positive impact on the job landscape across sectors and geographies as employment sentiment has picked by 7 per cent from the 86 per cent drop it witnessed during the lockdown. Besides, Commerce and Industry Minister Piyush Goyal said after concluding a quick trade deal, India and the US need to sit down on the negotiating table for working towards a more sustainable, robust and enduring partnership in the form of a free trade agreement (FTA). However, there may be some cautiousness with rising coronavirus cases in the country. India has recorded more than 39,000 coronavirus cases in the past 24 hours, taking its total to 1,194,085. The country's death toll has now risen to 28,770. Traders may also be concerned with private report that economic activity continues to remain weak and will lead to a 6.1 percent contraction in India's GDP in the current fiscal. There will be some buzz in MSMEs stocks as the finance ministry said banks have sanctioned loans worth about Rs 1,27,582 crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector impacted by the economic slowdown triggered by COVID-19. Construction stocks will be in focus with ICRA’s report that the domestic mining and construction equipment (MCE) sector is likely to see a volume decline of over 20 percent in calendar year (CY) 2020 on account of loss of sales in April and May, and an overall weakness in the economy. There will be some earnings reaction based on the performance of the companies.

The US markets ended mostly higher on Tuesday, paring earlier gains, after Senate Majority Leader Mitch McConnell said he didn't expect Congress to pass another stimulus bill in the next two weeks. Asian markets are trading mostly in green on Wednesday after US President Donald Trump’s comments regarding the country’s surge in novel coronavirus cases outweighed a slight rally on Wall Street.

Back home, extending northward journey for fifth straight session, Indian equity benchmarks ended Tuesday’s session with healthy gains of over a percent, amid a firm trend in global markets on hopes of a COVID-19 vaccine. Sensex and Nifty closed above their crucial 37,900 and 11,150 levels, respectively. Sentiments remained jubilant since morning with frontline gauges started the session with gap-up opening as traders reacted positively to 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). Sentiments also remained up-beat 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. Traders also took 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. Buying got intensified in the late afternoon session, as sentiments remained buoyant with the India Meteorological Department (IMD) in its latest forecast said rains would pick up in the next few days over north and south India. Adding the optimism among the market participants, Employees' Provident Fund Organisation (EPFO) in its latest ‘Provisional Estimate of Net Payroll’ data report has showed that India created 318789 new jobs in the month of May 2020 as against revised figure of 100825 in April 2020. Encouraging and better-than-expected earnings by corporates along with rupee’s appreciation against dollar also provided support to the markets. Investors overlooked External Affairs Minister S Jaishankar’s statement that the free trade agreements (FTAs) that India entered into over the years have not been able to largely serve the country's economy well in terms of building its capacities, though all such pacts are not the same. Finally, the BSE Sensex rose 511.34 points or 1.37% to 37,930.33, while the CNX Nifty was up by 140.05 points or 1.27% to 11,162.25.