Markets likely to get optimistic start on Tuesday

Indian markets ended higher on Monday after a volatile session led mainly by robust gains in banking and financial stocks. Today, the markets are likely to get optimistic start following overnight gains on wall street and positive cues from Asian peers. Traders will be taking encouragement with the economic think-tank NCAER's statement that its Business Confidence Index (BCI) rose 41.1 per cent in the July-September 2020 period, indicating signs of improvement. Some support will some as the Finance Ministry released Rs 6,000 crore as the second tranche to 16 States and three Union territories under its special window to states for meeting the GST compensation cess shortfall. Also, India has reported a decline in the number of fresh Covid-19 cases to 37,592 in the past 24 hours. The total caseload stands at 8,266,914. The country's death toll has mounted to 123,139. Besides, the government has extended the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs by one month till November 30, as the scheme has so far failed to meet the target of Rs 3 lakh crore. The scheme was valid till October-end. However, there may be some cautiousness as four former Reserve Bank governors warn that domestic banks, which have the highest bad loan pile in the world, pose a huge risk to the recovery of the pandemic-ravaged economy unless the government rescues them. Meanwhile, the Reserve Bank of India has extended trading hours for currency and rupee markets including forex derivatives, government securities, commercial paper and certificates of deposit by 90 minutes. The revised trading hours for rupee and bond markets are from 10 am to 3:30 pm as per Indian Standard Time as against 2 pm earlier. The revised timings will be effective from November 9, 2020. There will be some buzz in the telecom stocks with a private report that telecom sector's revenue growth picked up to about 5 per cent in the September quarter against 1 per cent in the June quarter after relaxation of lockdown curbs. There will be some reaction in hospitality industry stocks as hospitality industry body FHRAI urged the government to provide soft loans to the hotel and restaurant sector as businesses are finding it difficult to sustain themselves amid the COVID-19 pandemic. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended higher on Monday as investors geared up for an event-packed week centered around the US presidential election. Asian markets are trading in green on Tuesday as investors shrugged off US election jitters and took hope in strong factory output data in China, Europe and the United States, although the dollar and gold firmed on political uncertainty.

Back home, in a volatile session, Indian equity benchmarks managed to settle higher on Monday, led by buying interest in banking shares after ICICI Bank and IndusInd Bank reported strong September quarter earnings. Key gauges made optimistic start, as traders took some support with Ficci President Sangita Reddy's statement that India's strategy of dealing with the COVID-19 crisis has paid off and the country's economy is set to bounce back and emerge stronger. She said it was time to take bold actions and push the growth agenda vigorously. But, markets soon slipped in red territory, as traders got anxious with a private report that the pandemic-induced growth contraction and additional spending to support the needy amounting to a little over 2 percent of the economy are likely to push the combined fiscal deficit to 13 percent of GDP this fiscal - nearly double of the past year. However, in late hour of trading session, domestic bourses gave up all the losses and ended with minor gains, taking support from the Ministry of Finance's statement the Goods and Services Tax (GST) revenue collections for the month of October 2020 were Rs 1,05,155 crore, which is 10 percent higher than October 2019. This made it the first time monthly revenues crossed the Rs 1 lakh crore mark in FY21. Some support also came as India's manufacturing sector activity improved for the third straight month in October with companies raising output to the greatest extent in 13 years amid robust sales growth. The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) rose from 56.8 in September to 58.9 in October, and pointed to the strongest improvement in the health of the sector in over a decade. Finally, the BSE Sensex rose 143.51 points or 0.36% to 39,757.58, while the CNX Nifty was up by 26.75 points or 0.23% to 11,669.15.