Benchmarks to get flat-to-positive start on Wednesday

Indian markets ended at a 7-month high on Tuesday, helped by gains in financials and auto stocks. Today, the start of session is likely to be flat-to-positive amid mixed cues from Asian peers. Some support will come with report that companies garnered more than Rs 1 lakh crore from the capital markets in August, a surge of 64 percent from the preceding month, with private placement of debt instruments emerging as the most preferred route for financing business needs. The funds have been mopped-up mainly for business expansion plans, loan repayments and working capital requirements. Traders may take note of report that the Reserve Bank of India (RBI) is widely expected to keep rates steady when its two-day monetary policy committee (MPC) meeting concludes on October 09. The RBI said it will hold the MPC meeting from October 7 to October 9, having delayed it by a week in order to give the government time to appoint three new external members to the panel. Though, there may be some cautiousness with report that the coronavirus cases in India jumped to 7,722,746 with over 69,000 new infections reported across the country. With 991 fatalities in 24 hours, India's death toll stands at 104,591. Banking stocks will be in focus with Fitch Ratings’ report that Indian banks are likely to face a tough operating environment in the near term as stressed loans and write-offs are set to increase due to the economic fallout from the coronavirus pandemic. There will be some reaction in aviation stocks with IATA’s report that the global airline industry will burn through $77 billion in cash during the second half of 2020 despite the resumption of flight services amid the coronavirus pandemic. There will be some buzz in the IT services sector stocks as Fitch Ratings said the Indian IT services sector is expected to return to high single-digit revenue growth in 2021-2022 galvanised by higher demand for digital transformation after a flattish 2020. Investors will focus on the Q2 results, TCS is among the five companies scheduled to announce their September quarter earnings later in the day.

The US markets ended lower on Tuesday after President Donald Trump called off stimulus talks until after the November election. Asian markets are trading mixed on Wednesday following overnight sell-off on the Wall Street.

Back home, extending winning run to fourth day, Indian equity benchmarks clocked significant gains on Tuesday, propped up by Finance, Realty and Banking stocks amid positive global cues. Indian markets made gap-up opening and continued positive momentum for whole day, as traders took encouragement with Commerce Minister Piyush Goyal’s statement Indian exports will automatically increase if the products are good and competitively priced and that products are entrepreneurs should not think that subsidies are the only solution. Some solace also came with IT Minister Ravi Shankar Prasad’s statement that artificial intelligence (AI) has massive potential to generate development and India is well-poised to tap into the opportunity with its large pool of skilled professionals. He also said the proposed data protection legislation will give a big fillip to the country's data economy. Domestic indices witnessed a strong rally in the last hour of trade, taking support from the survey report indicated that Indian service sector output broadly stabilized in September. The seasonally adjusted India Services Business Activity Index rose for the fifth straight month in September to 49.8 from 41.8 in August. But, it remained in the contraction zone as incoming new business fell moderately due to the damaging impact of the pandemic on demand, leading to more job losses. Meanwhile, the Centre said it will release Rs 20,000 crore to states on account of GST compensation dues. In the meeting of the 42nd GST Council, Finance Minister Nirmala Sitharaman said the states which received less apportionment of Integrated GST (IGST) for 2017-18, the Centre will next week transfer a cumulative Rs 24,000 crore to them. Finally, the BSE Sensex rose 600.87 points or 1.54% to 39,574.57, while the CNX Nifty was up by 159.05 points or 1.38% to 11,662.40.