Markets to make gap-down opening amid sell-off in global peers

Indian markets ended lower for the fifth straight session on Wednesday as rising Covid-19 cases at home and fears over more pandemic lockdowns in Europe dented sentiment. Today, the markets are likely to make gap-down opening on the back of weak global cues. Besides, the scheduled expiry of monthly derivatives is likely to keep the session volatile. Rising coronavirus cases to dampen sentiments in the markets. India recorded 89,688 coronavirus cases, taking its total caseload to 5,730,184. India has added over 1,000 deaths every day for 24 days. Prime Minister Narendra Modi chaired a high-level virtual meeting with chief ministers and health ministers of many states. During the meeting he announced that states can spend 50 per cent of the state disaster relief fund (SDRF) amount on efforts to check the spread of Covid-19. Also, there will be some cautiousness with a private report that v-shaped recovery unlikely in India as Covid cases rise. Traders will be concerned with the Department for Promotion of Industry and Internal Trade (DPIIT) data showing that foreign direct investment (FDI) equity inflows into India contracted by 60 per cent to $6.56 billion (Rs 49,820 crore) during April-June 2020. Traders may take note of FICCI President’s statement that the economy can be revived only by boosting consumer sentiments, which are weak and need measures like discount vouchers from the government to spur the pending. Though, some support may come later in the day as Commerce and Industry Minister Piyush Goyal said that the government has set up a National Traders' Welfare Board with the objectives of welfare of traders and their employees, simplification of the Acts and rules applicable to traders, reduction of compliance burden and improvement in access to funds. Agriculture stocks will be in focus as the Commission for Agricultural Costs and Prices (CACP) recommended a fertiliser cash subsidy of Rs 5,000 per year to farmers. There will be some reaction in insurance stocks with a private report that non-life insurers have witnessed 3.6 per cent growth in premiums in the first five months of FY21, a signal that the second quarter (Q2) will be better for the industry than Q1 when firms saw a drop in premiums.

The US markets ended sharply lower on Wednesday amid renewed weakness among technology stocks, as reflected by the particularly steep drop by the tech-heavy Nasdaq. Asian markets are trading under pressure on Thursday after Fed Chairman Jerome Powell reiterated there's a long way to go for the economic rebound.

Back home, extending losses for the fifth straight session, Indian equity benchmarks ended Wednesday’s session with minor cuts, as investors remained cautious over spiking virus infections. The benchmarks staged a gap up opening, as India and China agreed to stop sending troops to the front line of their disputed Himalayan border in what appears to be the first step towards resolving the 20-week military standoff along the Line of Actual Control (LAC) in Ladakh. Traders found some solace with ICRA’s report that India's current account will swing to a surplus of $30 billion or 1.2 percent of GDP in FY21, due to slowdown in imports during the pandemic, making it clear that it will be a temporary phenomenon. Some support also came as parliament passed amendments to the Banking Regulation Act to bring cooperative banks under the supervision of the RBI, a move aimed at protecting the interest of depositors. However, local indices pared all intra-day gains and slipped into red terrain in afternoon deals, due to profit-booking at higher levels a day ahead of expiry of September derivative contracts. Some anxiety also came as the United Nations Conference on Trade and Development (UNCTAD) projected India’s economy to contract 5.9 per cent in 2020, and warned the country to not repeat its past mistake of announcing austerity measures. It forecast the economy to grow 3.9 per cent next year. Though, in the final hour of trading, key gauges managed to cut the losses significantly, as some optimism remained among traders with report that the government aims to catapult India to among the top 10 countries in World Bank's ease of doing business rankings with the comprehensive labour reforms which are likely to be completed after Parliament approves three draft codes in the ongoing session. Finally, the BSE Sensex fell 65.66 points or 0.17% to 37,668.42, while the CNX Nifty was down by 21.80 points or 0.20% to 11,131.85.