Benchmarks likely to make flat-to-positive start on Thursday

Indian markets ended lower Wednesday dragged by selling in banking and IT stocks amid negative global cues. Today, the markets are likely to get flat-to-positive start tracking gains in global peers. Traders will be taking encouragement with Finance Minister Nirmala Sitharaman’s statement that banks are going to be the catalysts for economic revival. Some support will some with report that the government is planning to save about Rs 35,000 crore to help manage the fiscal load put by the production-linked incentive (PLI) and phased manufacturing program (PMP) schemes, its initiatives to attract investment into the country. Traders may take note of report that Niti Aayog CEO Amitabh Kant said India was the youngest country with a vibrant startup eco-system and it must convert the present (COVID-19) crisis into an opportunity. Meanwhile, the Centre launched the Aatmanirbhar Bharat ARISE-Atal New India Challenges programme to support MSMEs and start-ups for making India innovative, resilient, tech-driven, and research and development (R&D)-oriented. However, rising coronavirus cases in the country are likely to weight on sentiments in the markets. Recording its worst-ever single-day spike of 95,529 coronavirus cases, India's tally has surged past the 4.4-million mark to 4,462,965. There may some cautiousness with ICRA’s report that state governments' deficit is seen in the range from 4.25 per cent up to 5.52 per cent of the gross state domestic product (GSDP) in the current fiscal. There will be some reaction in hotel and hospitality industry stocks with a study by industry chamber CII and hospitality consulting firm Hotelivat showing that the coronavirus pandemic has dealt a crippling blow to the Indian travel and tourism industry and the entire value chain linked to the sector is likely to lose around Rs 5 lakh crore or $65.57 billion. Oil and gas stocks will be in focus with government data showing that India's fuel demand fell 15.6 percent in August compared with the same month last year. Consumption of fuel totalled 14.39 million tonnes.

The US markets ended higher on Wednesday as investors jumped back in to take advantage of the pullback in technology-related stocks. Asian markets are trading mostly in green tracking overnight gains in US peers.

Back home, Indian equity benchmarks recovered from the day's low but still closed in the red for the second straight day on Wednesday, amid concerns over India-China tensions and intense selloff in global markets. Domestic equities opened on a negative note and stayed in red terrain for whole day, as traders were 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. Trading sentiments remain dampened as Fitch Ratings has sharply lowered its forecast for India's gross domestic product (GDP) growth for the current fiscal year (FY21) to (-) 10.5 percent from (-) 5 percent estimated earlier. It pointed out that the continued spread of the virus and the imposition of sporadic shutdowns across the country depress sentiment and disrupts economic activity. Adding to the pessimism, the private report said that India is witnessing the weakest hiring sentiment in 15 years with just 3 percent companies planning to add staff in the next three months. However, domestic benchmark indices managed to recoup most of the losses towards the end of the trading session, as some optimism remained among traders 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. Markets participants also took a note of Reserve Bank of India (RBI) board member Manish Sabharwal’s statement that India needs more banks for sustaining high growth and doubling the credit-to-GDP ratio to 100 per cent. He also said the country needs immediate reforms in banking, compliance, labour laws and education because hope is not a strategy. Finally, the BSE Sensex fell 171.43 points or 0.45% to 38,193.92, while the CNX Nifty was down by 39.35 points or 0.35% to 11,278.00.