Markets likely to open in green on Tuesday

Indian markets ended sharply lower on Monday to extend recent losses, with mixed global cues, foreign fund outflows and rising Covid-19 cases in the country weighing on sentiment. Today, the markets likely to open in green following overnight gains on Wall Street and positive leads from Asian peers. Investors will be eyeing the Reserve Bank of India's (RBI) three-day monetary policy meeting that begins today. Some support will come with CARE Ratings’ report that banks have sanctioned around 44 percent of the targeted amount of liquidity support to micro, small and medium enterprises (MSMEs) under the government's Emergency Credit Line Guarantee Scheme (ECLGS). Though, rising coronavirus cases may impact sentiments. India has recorded over 50,000 cases in 24 hours for a 6th straight day, taking its tally to 1,855,331. After conducting over 20 million tests, India's positivity rate is now at over 8%. India's death toll stands at 38,969. Aviation stocks will be in focus as rating agency Icra said airlines operated at a much lower capacity at around 27 per cent in July 2020 compared to July 2019 level but there was a marginal increase over the 25 per cent capacity achieved in June 2020. Technology companies stocks will be in limelight as US President Donald Trump on Monday signed a new executive order on aligning federal contracting and hiring practices with the interest of American workers. There will be some reaction in telecom stocks with a report that Trai has granted additional time to Bharti Airtel and Vodafone Idea to submit detailed responses on fresh set of questions on their premium plans, where queries range from what happens when a non-priority customer is surrounded by priority users during congestion, to limit of throughput configured for the two sets of subscribers. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended higher on Monday as a rebound in multi-billion dollar deals, including Microsoft’s pursuit of TikTok’s US operations, lifted sentiment as efforts to hammer out a coronavirus relief bill resumed. Asian markets are trading mostly in green on Tuesday after strong manufacturing data and gains in tech stocks boosted global equities and the US dollar overnight.

Back home, extending their losing streak for fourth straight session, Indian equity benchmarks ended Monday’s trade on a pessimistic note with losses of over one and half a percent each, on the back of sustained selling by investors owing to muted earnings by some corporate. A weak trend in other Asian markets along with concerns over rising Covid-19 cases also added pressure on the markets. After gap-down opening, the domestic bourses never looked in recovery mood and continued moving northward to end near intraday lows, breaching their crucial support levels of 36,950 (Sensex) and 10,900 (Nifty). Sentiments remained subdued with union Finance Minister Nirmala Sitharaman’s statement that the coronavirus pandemic has definitely hit the supply chains which are continuing to disrupt the economic revival. Some weakness also crept in after the Commerce and Industry Ministry’s data showed that contracting for the fourth consecutive month, the output of eight core infrastructure industries shrank by 15% in June due to fall in the production of coal, crude oil, natural gas, steel, cement and electricity. Markets remained under pressure in late afternoon session, as a monthly survey showed India's manufacturing sector activity contracted at a slightly faster pace in July as demand conditions remained subdued amid prolonged closures, following which firms reduced both staff numbers as well as purchasing activity. The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 46 in July, down from 47.2 in June. Adding anxiety among traders, Finance Ministry said that the GST collections in July fell to Rs 87,422 crore from Rs 90,917 crore in June. However, July collections are higher than Rs 62,009 crore in May and Rs 32,294 crore in April.  Traders also took a note of 15th Finance Commission Chairman N K Singh’s statement that India needs to grow much faster over the next 10 years with the use of technology and reforms in order to become an important global player. To achieve the potential growth rate of 7-8 per cent, he said India has to improve factor productivity and reduce incremental capital output ratio. Finally, the BSE Sensex lost 667.29 points or 1.77% to 36,939.60, while the CNX Nifty was down by 181.85 points or 1.64% to 10891.60.