Markets likely to open in red following global sell-off

Indian markets ended with minor cuts on Tuesday dragged by selling across most key indices, however, IT stocks and index heavyweight RIL capped gains. Today, markets are likely to start the day on a weak note, following negative trends in major Asian peers, coupled with concerns over India-China tensions. Rising coronavirus cases in the country are likely to dampen sentiments in the markets. India has recorded nearly 90,000 new Covid-19 cases in the past 24 hours. With this, the country's tally has surged past the 4.3 million mark to 4,367,436. Death toll has climbed to 73,923. traders will also be concerned with report that the clinical trials for the Covid-19 vaccine candidate developed by the University of Oxford, which was expected to start at PGIMER in Chandigarh, have been delayed by at least a week over safety approvals. There will be some cautiousness with report that the coronavirus pandemic-stricken states have borrowed a whopping Rs 2.97 trillion so far this financial year, which is as much as 51 per cent more than the corresponding period a year ago. However, some support may come later in the day with a private report that the Indian economy is expected to climb from a deeper trough in the calendar year 2020 (CY20) and see a stronger rebound in the year 2021. Meanwhile, Capital markets regulator Sebi added the National Stock Exchange (NSE) to the list of entities that can undertake e-KYC Aadhaar authentication. Aviation stocks will be in focus with a private report that government is all set to operationalize 26 new airports and award another 12 airports for development through the public-private partnership (PPP) mode this fiscal. There will be some reaction in insurance companies stocks with report that life insurers have posted an almost 15% rise in first-year premium in August thus building on the growth momentum of the previous month after a dismal first quarter this fiscal. Besides, the IPO of Route Mobile opens for public subscription today. The cloud communications service provider proposes to raise Rs 600 crore through the IPO. A price band of Rs 345 to 350 apiece per share has been fixed for the IPO that will conclude on September 11.

The US markets closed lower for a third straight session on Tuesday as heavyweight technology names extended their sell-off. Asian markets are trading in red on Wednesday as the shares on Wall Street tumbled overnight stateside.

Back home, Indian equity benchmarks erased their intra-day gains to settle with negative bias on Tuesday, amid selling in blue-chip counters such as Tata Steel, Bharti Airtel, Axis Bank and ONGC. After making a cautious start, key indices gained traction and traded firmly higher for most part of the day, as traders took support with report that the Reserve Bank of India (RBI) announced a special round of simultaneous sale and purchase of government securities (G-Secs) for Rs 10,000 crore each, on September 10, 2020. It has released details of the sale and purchase of securities, which will be done using the multiple price auction method. Some optimism also came with industry chamber Assocham’s statement that the rate of decline in output of core segments of the economy has been arrested considerably in July 2020. In line with an evaluation by Assocham, cement, steel and coal, which suffered heavy declines in the first quarter, recovered significantly in July 2020, even though the annualised numbers reflect contraction. However, the benchmark indices failed to hold initial gains and fell in the final minutes of trade to end with minor cuts, as traders got anxious with Moody's Investors Service’s report that the continued rise in new infection rates across parts of Europe and Asia highlights the risk of a second wave of infections which could lead to renewed closures and a sustained pullback in consumption. Some cautiousness also came after domestic rating agency India Ratings and Research revised the country's FY21 GDP growth forecast to (-) 11.8 per cent from (-) 5.3 per cent earlier. The agency, however, expects India’s gross domestic product (GDP) to rebound and grow at 9.9 per cent year-on-year in FY22 mainly due to the weak base of FY21. Meanwhile, the Finance Ministry said banks have sanctioned loans of about Rs 1,61,017 crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under the slowdown caused by the coronavirus pandemic. Finally, the BSE Sensex fell 51.88 points or 0.14% to 38,365.35, while the CNX Nifty was down by 37.70 points or 0.33% to 11,317.35.