Benchmarks to make negative start on Thursday

Indian markets ended higher Wednesday led by gains in pharma, auto and realty stocks amid strong global cues. Today, the markets are likely to make negative start following weakness in the global peers. Traders will be concerned as the Organisation for Economic Co-operation and Development (OECD) in its Interim Economic Outlook report forecast a deeper contraction of 10.2% for India in the current fiscal, surpassing its June estimate of -7.3% in the event of a second wave of infections. Market participants will be anxious with report that total tax collection of the Centre, including advance tax collection for the second quarter, fell 22.5% to Rs 2,53,532.3 crore till September 15 of the current fiscal as compared to the year-ago period. Also, showing no signs of a relief, India has recorded 97,859 Covid-19 cases in just 24 hours, taking its tally past the 5.1-million mark. With this, India is rapidly nearing the US tally of 6.8 million. Though, some support may come later in the day with report that the government is in the process of bringing out a strategy paper on boosting industrial growth which will be a road map for all businesses in the country. There will be some buzz in the sugar stocks with report that the government has extended the deadline for exporting sugar from existing stocks by three months to December to help industry take advantage of the global supply disruption because of the pandemic, and clear cane dues of farmers. Aviation stocks will be in focus with DGCA data showing that passenger load factor crossed 60 per cent in August for the first time since the resumption of domestic flights in May this year. Industry-wise load factor or seat occupancy was 63.2 per cent in August. There will be some reaction in insurance industry’s stocks with a private report that the lockdown imposed by the government to contain the spread of the coronavirus in the second fortnight of March resulted in the life insurance industry losing around 4 million policies and premiums to the tune of Rs 45,000 crore. Meanwhile, Happiest Minds is set to make its debut on the bourses. The issue, which was sold between September 7 and September 9 in the price band of Rs 165-166, was subscribed 151 times.

The US markets ended mostly lower on Wednesday as Fed Chairman Jerome Powell said the pace of the ongoing economic recovery is expected to slow. Asian markets are trading mostly in red on Thursday after the US Federal Reserve’s policymaking committee indicated the overnight rate could stay close to zero for years to reach its 2 percent inflation target.

Back home, extending gains to a second straight day, Indian equity benchmarks ended the Wednesday’s session with gains of over half percent each, supported by buying interest in realty, healthcare and auto shares. After making slightly positive start, key indices gained some traction, as traders took some support as Chief Economic Advisor Krishnamurthy Subramanian exuded confidence that the country would be back to a high growth path through reforms announced by the government, after overcoming the COVID-19 pandemic. Some support also came with a private report stated that consumer confidence index has shown a marginal uptick of 1.1 percentage points in September 2020. However, markets trimmed some of their gains in late morning session, as traders got anxious with the government data showing that contracting for the sixth straight month, India's exports slipped 12.66% to $22.7 billion in August, on account of decline in the shipments of petroleum, leather, engineering goods and gems and jewellery items. The trade deficit for August this year was estimated at $6.77 billion, against $4.8 billion in July 2020 and $13.86 billion in August 2019. But, benchmark indices regained their upward momentum in second half of the session, taking support from Foreign Secretary Harsh Vardhan Shringla’s statement that India has received over $20 billion in FDI amid the coronavirus pandemic, showcasing the country as one of the most attractive destinations for investment globally.  Traders also took solace with RBI Governor Shaktikanta Das’s statement that India has seen some stabilisation in economic activity in the ongoing fiscal’s second quarter. He said that the economic recovery will be gradual, but some of the high-frequency indicators such as agriculture activity, manufacturing PMI, and private estimates of unemployment point to some stabilisation of economic activity in the second quarter. Finally, the BSE Sensex rose 258.50 points or 0.66% to 39,302.85, while the CNX Nifty was up by 82.75 points or 0.72% to 11,604.55.