Markets likely to get negative start on weak global cues

Indian markets ended higher after heavy buying interest in banks, FMCG, auto and pharma stocks. Today, the start of session is likely to be negative tailing weakness in the global markets. There will be some cautiousness with report that a day after recording the lowest number of fresh Covid-19 cases since July 18, India on Tuesday reported a daily jump of 42,965, even as the tally soared to 7,988,853. Market participants will be concerned with the central bank’s statement that Indian states are racking up more debt to fund the prospect of wider budget deficits as they step up spending to fight the virus pandemic. Though, some respite may come later in the day with union finance minister Nirmala Sitharaman’s statement that she expects India to become one of the fastest-growing economies by FY22 With pick-up in demand and manufacturing. However, she expects a near-zero percent growth in the third and fourth quarters of FY21 with steady and sustainable growth. Some support may come  as  the Reserve Bank asked all lending institutions, including non-banking financial companies, to implement the waiver of interest on interest for loans up to Rs 2 crore for the six months moratorium period beginning March 1, 2020. Traders may take note of report that the government may extend the MSME loan scheme, ECLGS (Emergency Credit Line Guarantee Scheme), beyond October to achieve Rs 3 lakh crore of guaranteed loans to businesses. Besides, investors will track the assembly elections in Bihar, where the first phase of voting begins today, as well as the Covid trend. E-commerce sector stocks will be in focus with report that appliances and consumer electronics companies have reported high double-digit growth in sales during this Navratri season, with e-commerce platforms seeing good traction as shoppers opt for contactless buying. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended mostly in red on Tuesday as Trump acknowledged an economic relief package would likely come after the 3 November election. Asian markets are trading lower on Wednesday as coronavirus infections continue to rise stateside.

Back home, reversing previous session’s losses, Indian equity benchmarks ended higher on Tuesday, on account of broad based buying in blue chip counters despite negative cues from global markets. After making slightly positive start, key gauges slipped into red, as exporters expressed concerns over rising freight charges and shortage of containers as it would impact the country's outbound shipments, and sought Commerce Ministry's intervention in the matter. But, markets soon recovered and traded higher with marginal gains, taking support from a report that it could be a healthy sign of economic recovery, goods and services tax (GST) collections recorded in the month of October are likely to cross Rs 1 lakh crore for the first time this fiscal. Some support also came in with British drug maker AstraZeneca Plc stating that the Covid-19 vaccine being developed by the University of Oxford produced an immune response in both elderly and young people and adverse reactions were lower among the elderly. Markets extended gains in second half of session to end near day’s high, as traders took encouragement, as Reserve Bank asked all lending institutions, including non-banking financial companies, to implement the waiver of interest on interest for loans up to Rs 2 crore for the six months moratorium period beginning March 1, 2020. On October 23, the government had announced the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts. Some support also came with rating agency CRISIL stated that over 40% of banking system credit and 75% of borrowers are likely to benefit from interest-on-interest concession granted by the federal government. Further, hopes of higher inflows after MSCI said it will implement the new regime on foreign ownership limits in the MSCI Global Indexes containing Indian securities in the November 2020 Semi Annual Index Review, also boosted investor sentiment. Finally, the BSE Sensex rose 376.60 points or 0.94% to 40,522.10, while the CNX Nifty was up by 121.65 points or 1.03% to 11,889.40.