Domestic markets likely to get optimistic start of new week

Indian markets ended higher on Friday mainly led by gains in the financials, metal and pharma sectors. Today, the start of new week is likely to be optimistic tacking firm trade in Asian peers. Traders will be taking some encouragement with Finance Minister Nirmala Sitharaman’s statement that the government has taken a host of initiatives, including a stimulus package totalling 10 per cent of the country's GDP and major reforms in the labour sector, to combat the impact of the coronavirus pandemic. Some support will come with ICRA’s report that Farm sentiments have remained buoyant mainly driven by healthy monsoon and further optimism of a good kharif crop. Market participants may take note of report that a government-appointed panel said that the COVID-19 pandemic has peaked in India and can be controlled by early next year with minimal active cases by February-end if protective measures are followed. However, there may be some cautiousness with the Reserve Bank of India’s (RBI) report that high incidence of non-performing assets (NPAs) in banks acts as a major roadblock in transmission of monetary policy actions of the Reserve Bank. Also, traders may be worried with SEBI’s report that the value of P-note investments in Indian markets - equity, debt, hybrid securities and derivatives - declined to Rs 69,821 crore at September-end after hitting a 10-month high of Rs 74,027 crore at the end of August. Meanwhile, India on Sunday registered a spike of 55,511 cases, taking the total count of coronavirus cases to 7,548,238, and the country's death toll reached 114,642. There will be some buzz in the power stocks with the government data showing that India's power consumption grew 11.45 per cent to 55.37 billion units (BU) in the first half of October this year, mainly driven by buoyancy in industrial and commercial activities. Real estate stocks will be in focus as in a bid to increase flow of credit to the real estate sector, the RBI rationalised the risk weightage to LTV (loan to value) ratio for all new housing loans sanctioned up to March 31, 2022. There will be some reaction in auto stocks with SIAM’s report that passenger vehicle exports from India declined 57.52 per cent in April-September period of the current fiscal year as COVID-19 related disruptions hampered despatches to various global markets. Also, there will be lots of earnings reaction based on the performance of the companies.

The US markets ended mostly in green on Friday after an advance reading of September retail sales showed stronger-than-expected growth. Asian markets are trading higher with notable gains on Monday buoyed by hopes of a US fiscal package before the US presidential elections next month.

Back home, last trading day of the week turned out to be fabulous day for Indian equity benchmarks where frontline gauges garnered gain of over half a percent each to settle above their crucial 39,900 (Sensex) and 11,750 (Nifty). Markets started the day on optimistic note as traders opted to buy beaten down but fundamentally strong stocks after yesterday’s bloodbath. Sentiments remained positive with Moody's Investors Service in its latest report has said that while the government's second round of stimulus will spur consumer spending over the near term as coronavirus-related restrictions continue to be eased and India's festive season begins, the support to the country’s Gross domestic product (GDP) growth will be minimal. Traders also remained optimistic on report that India’s merchandise exports grew by 5.99 percent to $27.58 billion in September 2020 as compared to same period of last year, on account of growth in shipments of drugs and pharmaceuticals and readymade garments. Trade deficit, gap between imports and exports, narrowed to $2.72 billion in September 2020 as compared to a shortfall of $11.67 billion in the year ago-month. Despite some volatility, markets traded in green and ended with a gain of over half a percent as sentiments remained soothing with Union Health Minister -- Harsh Vardhan’s statement that India is expected to have a COVID-19 vaccine in a few months and the country should be in the process of delivering it to people in the next six months. He said to fight against COVID-19 the social vaccine of maintaining a distance of six feet should be followed, along with regular washing of hands and wearing of masks and face covers, especially in public places. Some support also came with Finance Minister Nirmala Sitharaman’s statement that V-shaped pattern of recovery is being seen in several high-frequency indicators, driven by various measures taken by the government to revive economic growth, hit hard by the outbreak of Covid-19 pandemic. She said several low-income and developing countries are confronted with the challenge to protect and ensure livelihood for millions slipping below the poverty line. Finally, the BSE Sensex surged 254.57 points or 0.64% to 39,982.98, while the CNX Nifty was up by 82.10 points or 0.70% to 11,762.45.