Markets likely to get cautious start amid mixed Asian cues

Indian markets ended on a higher note on Tuesday supported by the gains in financials and as factory activity data signalled a recovery in demand after coronavirus-led disruptions. Today, the domestic indices are likely to make cautious start amid mixed cues from Asian peers. There will be some cautiousness with the government data showing that after recording positive growth in September, India's exports declined 5.4 percent to $24.82 billion in October on account of dip in shipments of petroleum products, gems and jewellery, leather, and engineering goods. Besides, trade deficit in October narrowed to $8.78 billion as against $11.76 billion, as imports also fell 11.56 percent to $33.6 billion during the month under review. Besides, India has reported 43,659 fresh Covid-19 cases in the past 24 hours. The total caseload now stands at 8,312,947. The country's death toll has mounted to 123,579. However, some support may come later in the day as terming elevated food prices a temporary phenomenon, Economic Affairs Secretary Tarun Bajaj said it should be back to normal soon on the back of arrival of new crops and government measures for improving supply of essential commodities. Separately, he said Finance Minister Nirmala Sitharaman will soon announce the next set of stimulus package to boost the coronavirus-hit economy. Meanwhile, the Reserve Bank of India is looking at diversifying its foreign exchange reserve investments amid the fall in global interest rates caused by the COVID-19 pandemic. There will be some buzz in metal stocks with a private report that steel companies have increased prices by around Rs 1,250 a tonne effective November, bringing it closer to peak levels of 2018. OMCs stocks will be in focus as oil prices rose over 2 percent on Tuesday, advancing with other financial markets on U.S. Election Day although traders were bracing for volatility depending on the voting results and as surging coronavirus cases around the world fed worries about fuel demand. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended higher on Tuesday as investors bet that one of the country’s most divisive presidential races could end with a clear victory for Democratic nominee Joe Biden and a swift deal on more fiscal stimulus. Asian markets are trading mixed on Wednesday as results from the US Presidential election hinted at a close race with no clear winner yet in sight.

Back home, Indian equity benchmarks advanced for second session in a row and settled with gains of over a percent on Tuesday, led by strong buying interest in banking, finance and metal shares. The benchmarks opened higher and traded in fine fettle, as sentiments got a boost with think-tank National Council of Applied Economic Research (NCAER) stated that its Business Confidence Index (BCI) rose 41.1 per cent in the July-September 2020 period. This assumes significance as the GDP slipped by a historic 23.9 per cent in the April-June 2020 quarter, on account of the lockdown imposed by the government to check the spread of coronavirus. Some support also came in as 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. Sentiments remained optimistic in late afternoon session as reports stated that the Reserve Bank of India extended the deadline for banks to comply with new guidelines with respect to existing current accounts. Current accounts are widely used by businesses for their daily activities. A Frequently Asked Questions (FAQ) document will be issued to address all the issues raised by banks regarding implementation of the guidelines for existing current account. Markets participants also took a note of SBI Research's report that higher duties will not promote competitive manufacturing but may lead to inefficiency. It noted that since the beginning of 2000, successive governments have been eyeing a quarter of the Gross domestic product (GDP) to come from manufacturing by 2025 but not much has moved in that direction. Finally, the BSE Sensex rose 503.55 points or 1.27% to 40,261.13, while the CNX Nifty was up by 144.35 points or 1.24% to 11,813.50.