Domestic markets to get positive start on Monday

Indian markets ended considerably higher on Friday led by enormous buying in all key sectors amid positive momentum in the Asian peers. Today, the start of new week is likely to be positive taking lead from Asian peers. Investors will be focusing the Reserve Bank of India’s Monetary Policy Committee (MPC) meet which will begin from September 29 and end on October 1. The Reserve Bank is likely to keep interest rates unchanged in the forthcoming bilateral monetary policy review in view of the rising retail inflation driven mainly by supply-side issues. Some support will come with the RBI data showing that bank credit grew 5.26 per cent to Rs 102.24 lakh crore while deposits rose 11.98 per cent to Rs 142.48 lakh crore in the fortnight ended September 11. Market participants may take note of report that India on Sunday saw over 80,000 new Covid-19 cases, a notch less than the average daily additions since last month. Total caseload currently stands at 6,073,348. Though, traders may be concerned as the National Council of Applied Economic Research (NCAER) projected the economy to contract by 12.6 per cent during the current financial year. It said all the remaining three quarters of 2020-21 were projected to witness a fall in the gross domestic product (GDP). There may be some cautiousness as global rating agency S&P said India's economy may experience a record contraction in the current financial year mainly due to the global COVID-19 pandemic, and the real GDP growth is expected to recover from next fiscal onwards. The agency has also affirmed its BBB- long-term and A-3 short-term foreign and local currency sovereign credit ratings on India. There will be some buzz in the agriculture stocks as Care Ratings report stated that with yet another record food production at 301 million tonnes expected on the back of a bumper kharif crop this year, recent MSP hikes can leave the farmers with an additional liquidity of Rs 50,000 crore. Banking stocks will be in focus with report that the Finance Ministry is likely to provide capital support from the Rs 20,000 crore fund approved by Parliament in recently concluded session to some Public Sector Banks (PSBs) in the third quarter itself. There will be some reaction in transport, energy infra stocks as India Ratings and Research (Ind-Ra) maintained a negative outlook on transport and energy infrastructure for second half of the current financial year.

The US markets ended in green on Friday boosted by a strong rebound in several tech giants. Asian markets are trading higher on Monday as investors react to Chinese economic data released over the weekend.

Back home, snapping their six-session losing run, Indian equity benchmarks displayed spirited performance on Friday by clocking handsome gains of over two percent in the session, due to across-the-board buying even as the risks and worries over Covid-19 and economy remained. Key gauges traded on positive note since the beginning, as traders took encouragement with report that the government has extended the suspension of insolvency proceedings for any COVID-19 related default by a period of three months, effective from September 25. The Insolvency & Bankruptcy Code (IBC) was suspended for a period of six months with effect from March 25, 2020, by the government earlier, to protect those experiencing financial distress on account of the pandemic. However, Indian equities climbed off the opening highs in late morning deals as domestic rating agency India Ratings and Research (Ind-Ra) has maintained a negative outlook on non-banking financial companies (NBFCs) and housing finance companies (HFCs) for the second half of 2020-21 (2HFY21) amid Coronavirus disease (COVID-19) related business disruptions. Though, domestic indices regained traction by adding more strength in second half of the session, supported by stronger Asian peers on hopes of US stimulus. Some support came in with report that the Reserve Bank of India (RBI) has announced it will conduct simultaneous purchase and sale of government securities under open market operation (OMO) for an aggregate amount of Rs 10,000 crore each on October 1. Adding the optimism among the investors, International Monetary Fund (IMF) said that Prime Minister Narendra Modi’s Aatmanirbhar Bharat is an important initiative. The economic package under this self-reliant India initiative, which was announced in the aftermath of the coronavirus shock, has supported the Indian economy and mitigated significant downside risks. Finally, the BSE Sensex rose 835.06 points or 2.28% to 37,388.66, while the CNX Nifty was up by 244.70 points or 2.26% to 11,050.25.