Markets to get positive start on Monday

Indian markets ended flat on Friday as gains from IT and auto stocks were capped by banking and financial services sector. Today, the markets are likely to make positive start following global peers. Investors will be eyeing CPI and WPI inflation data which are scheduled to be release later in the day. Traders will be taking encouragement as Chief Economic Adviser K V Subramanian exuded confidence that retail inflation will come down in the days ahead with the easing of lockdowns, attributing the rise in inflation to supply-side frictions. Some support will come as the finance ministry said banks have sanctioned loans worth over Rs 1.63 lakh crore to more than 42 lakh business units under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector. Also, RBI data showed that the country's foreign exchange reserves rose by $582 million to reach a lifetime high of $542.013 billion in the week ended September 4. However, there may some cautiousness as India’s industrial output contracted 10.4 percent in July as against a 4.9 percent growth year-on-year (YoY). traders may be concerned as rating agency Moody's projected India's real gross domestic product (GDP) to contract by 11.5 percent in FY21. Also, domestic rating agency CARE Ratings said the country's economy is likely to see a sharper contraction of 8-8.2 percent in the current financial year compared to a decline of 6.4 per cent it had projected earlier. Meanwhile, with over 93,215 new cases, India's coronavirus tally has reached 4,845,003. The death toll has risen by 1,140 to 79,754. DTH companies stocks will be in focus with Crisil’s report that people staying indoors due to the COVID-19 pandemic has proved to be a bonanza for direct-to-home (DTH) broadcasters as the industry is all set to post a growth of up to 6 per cent in its topline to Rs 22,000 crore in FY21. There will be some reaction in coal industry stocks as India's coal import declined by 34.9 percent to 12.46 million tonnes (MT) in August on account of subdued demand for the dry fuel from consuming sectors like power and cement.

The US markets ended mostly higher on Friday as traders seemed reluctant to make significant moves following the substantial volatility seen over the past several sessions. Asian markets are trading mostly higher on Monday with investors watching shares of Japanese conglomerate Softbank Group following an announcement of its sale of U.K. chip designer Arm.

Back home, Fluctuating between losses and gains, Indian equity benchmarks ended the day largely flat on Friday, on the back of weak global cues amid ongoing coronavirus spread. Markets made a cautious start and struggled for direction throughout the day, as sentiments got hurt with ratings agency Crisil’s report that the Indian economy will contract by 9 per cent in 2020-21 as the coronavirus infections are yet to peak and the government is not providing adequate direct fiscal support. Some concern also came with rating agency ICRA’s report that asset reconstruction companies (ARCs) are facing slowdown in recoveries from bad loans procured from banks due to failed auctions, absence of bidders and delay in payments amid COVID-19 pandemic. Trading sentiments remained in lackluster mood with CARE Ratings’ report that reflecting the overall stress in the economy, the employment growth rate declined to 3.5 percent in FY20 as compared to 3.8 percent in the previous fiscal year, but the total number of jobs increased to 50.02 lakh from 48.32 lakh. Adding more pessimism, the International Monetary Fund (IMF) has said the impact of COVID-19 pandemic is significant on India's development and the immediate priority is a coordinated policy response. However, markets managed close session with minor gains, as traders found some solace with report that India and China have agreed on a five-point plan for resolving the prolonged border face-off in eastern Ladakh that included abiding by all existing agreements and protocol on management of the frontier, maintaining peace and tranquility and avoiding any action that could escalate matters. Finally, the BSE Sensex rose 14.23 points or 0.04% to 38,854.55, while the CNX Nifty was up by 15.20 points or 0.13% to 11,464.45.