Domestic markets likely to make flat-to-positive start

Indian markets ended notability higher on Tuesday, mirroring firm cues from Asia and Europe as investors weighed the possibility of additional fiscal stimulus from the United States. Today, the start of session is likely to be flat-to-positive despite mixed cues from Asian peers. Traders will be taking encouragement with Industry body CII’s statement that high frequency indicators are showing a material improvement as compared to multi-year low seen in April, and pointing towards a V-shaped recovery after the economy suffered on account of lockdown amid the coronavirus pandemic. Some support will also come with Union Minister Nitin Gadkari’s statement that the government is making efforts to attract FDI in infrastructure sector to address liquidity crunch faced by the COVID-19-hit economy. Though, rising coronavirus cases may dampen sentiments. India has recorded over 49,000 cases in the past 24 hours, taking its total number of Covid-19-positive cases to 1,532,135. The country's coronavirus caseload is the third-highest in the world, next only to the US (4,498,000) and Brazil 2,484,649. There may be some cautiousness as global forecasting firm Oxford Economics said that it expects India's GDP growth to lose momentum from late third quarter (October-December) of the current fiscal as the push from the initial reopening fades. There will be some buzz in the banking and NBFCs stocks as Prime Minister Narendra Modi will hold a meeting with stakeholders from Banks and NBFCs as well as secretaries to discuss and deliberate on vision and roadmap for the future today. Real estate firm stocks and housing finance companies stocks will be focus with a private report that housing sales plunged 79 per cent to 19,038 units across eight major cities in April-June, as demand was badly impacted due to the nationwide lockdown to control Covid-19 pandemic. There will be some reaction in aviation stocks as International Air Transport Association (IATA) has released recovery estimates on Global passenger traffic and said it would take until 2024 for passenger traffic to return to the pre-crisis level. There will be some important result announcements to keep the markets in action.

The US markets ended lower on Tuesday as investors braced for prolonged negotiations between Democrats and Republicans on another round of economic stimulus. Asian markets are trading mixed on Wednesday as investors await the US Federal Reserve’s interest rate decision.

Back home, Indian equity benchmarks have showcased a strong performance on Tuesday, by gaining more than a percent each in the session and settling above the psychological 11,300 (Nifty) and 38,450 (Sensex) levels, amid buying across sectors, as equities across Asia rose on hopes that another flood of US stimulus would cushion the global impact of renewed coronavirus outbreaks. Markets made an optimistic start and traded in fine fettle, as RBI Governor Shaktikanta Das made a strong case for stepping up investments in the infrastructure sector to restart the economy reeling under the impact of the COVID-19 pandemic. Some support also came in with Commerce and Industry Minister Piyush Goyal’s statement that the government will soon set up a single window system for clearances and approvals for industry, and is working on creating a land bank with a view to attract investments. Key gauges extended their upside in second half of the session, taking support from the Finance Ministry’s statement that the Centre has released over Rs 1.65 lakh crore as GST compensation to states for 2019-20 financial year, including Rs 13,806 crore for March. Traders remained optimistic with private report that the digitalisation of small and medium businesses (SMBs) could add up to $216 billion to India's GDP by 2024 and contribute to the country's economic recovery after COVID-19. Market participants paid no heed to 15th Finance Commission Chairman N K Singh’s statement that India will see a sharp V-shaped recovery in the third and fourth quarter of the current fiscal, but FY21 GDP growth would ultimately be in negative territory as the coronavirus lockdown led to serious demand and supply dislocations. Finally, the BSE Sensex gained 558.22 points or 1.47% to 38,492.95, while the CNX Nifty was up by 168.75 points or 1.52% to 11,300.55.