Benchmarks likely to make cautious start

Indian markets ended higher on Tuesday led by gains in metals, pharma and FMCG stocks amid positive global cues. Today, the start of session is likely to be cautious amid mixed Asian cues. Traders will be concerned with the Finance Ministry’s statement that the gross GST collection in August stood at Rs 86,449 crore, down from Rs 87,422 crore collected in July. There will be some cautiousness as Moody's Investors Service said India will be among the large emerging market sovereigns to have highest debt burden by 2021. Also, rising coronavirus cases is likely to dampen the sentiments in the markets. India has recorded over 68,000 new cases in the past 24 hours, taking its total caseload to 3,766,108. However, some respite may come later in the day with CII-IBA survey report stating that the financial conditions are looking up in the current quarter (Q2FY21) due to policy decisions and steps the government and Reserve Bank of India have taken to support economy. Traders may also take note of Union Minister of Commerce and Industry Piyush Goyal’s statement that the whole package of the US-India trade deal is almost ready and it can be finalised when the local political situation in the United States is conducive. Aviation stocks will be in focus with airlines body -- International Air Transport Association’s (IATA) statement that global air passenger traffic was 79.8 percent less in July this year compared to the corresponding period a year ago. There will be some reaction in power stocks with report that the slump in overall power consumption has narrowed to just 0.85 percent in August at 110.57 billion units (BU) amid considerable rise in economic activities and raised hopes that it would surpass normal level this month. Also, auto stocks will also be in action reacting to their monthly sales numbers.

The US markets ended higher on Tuesday led by tech shares, as traders kicked off a historically tough month for the market on the right foot and built on Wall Street’s best August performance since the 1980s. Asian markets are trading mostly in green on Wednesday following overnight gains on Wall Street.

Back home, Indian equity benchmarks managed to close higher with gains of over half percent each on Tuesday despite high volatility, led by buying pressure in telecom, metal and power stocks, amid positive global equities. After making cautious start, domestic bourses gained traction, as the Reserve Bank of India (RBI) announced a host of steps, including term repo operations totalling Rs 1 lakh crore in mid-September in order to ease pressure on the liquidity and maintain congenial financial conditions with a view to ensuring sustainable recovery of economic growth. However, markets soon turned highly volatile, as some anxiety remained among the local traders with report that India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. There was some cautiousness too with report that the output of eight core infrastructure industries tumbled by 9.6%, for the fifth consecutive month in July, due to the decline mostly in production of steel, refinery products and cement. But, local indices regained some traction to end higher, taking support from the survey report showing that  Indian manufacturing activity signalled growth in the month of August 2020, led by an improvement in customer demand as client businesses reopened, after lockdown restrictions eased amid the coronavirus disease 2019 (COVID-19). The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - jumped to 52.0 in August as against 46.0 in July. A sharp appreciation in the rupee against the US dollar added to the momentum. Indian rupee settled at 72.87 against the US dollar, registering a surge of 73 paise over its previous close. Finally, the BSE Sensex gained 272.51 points or 0.71% to 38,900.80, while the CNX Nifty was up by 82.75 points or 0.73% to 11,470.25.