Markets likely to get optimistic on firm global cues

Indian equity benchmarks ended with notable gains on Wednesday’s trading session after Finance Secretary Tarun Bajaj said that Indian economy is recovering fast and will soon be back on rails as all the parameters have started showing improvement. 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 pandemic-hit economy coming back on rails at more speed than expected, Union minister Prakash Javadekar said citing factors like increased demand of power and higher GST collections. He said an increase in rail freight collection, higher goods and services tax mop-up, rise in power demand and improved FDI inflows indicate that the economy was doing better in the second quarter of the current financial year. Further, some support may come as the Directorate General of Foreign Trade (DGFT) has said while October data looked promising for exports, the situation will improve further in the coming months due to collaborative efforts of all the stakeholders. Director General of Foreign Trade Amit Yadav has said since April, when there was a huge downfall in exports, it has made good progress and is going to rise in the coming months. Meanwhile, the finance ministry has said the economy has been recovering at a fast pace and would likely to reach pre-Covid-19 levels by the end of the current fiscal year. It, however, cautioned that the second wave of the pandemic could derail the recovery and warned against the breach of social distancing. However, there will be some cautiousness later in the day as companies garnered over Rs 75,000 crore from capital markets in September, a decline of 31 per cent from the preceding month, with private placement of debt instruments continuing to be the most preferred route for financing business. The funds were mopped up mainly for business expansion plans, loan repayments and working capital requirements. There will be some buzz in auto stocks as ratings agency Icra said Commercial vehicles (CV) volumes are expected to shrink 25-28 per cent this fiscal amid multiple headwinds along with the pandemic impact, and the outlook for the sector remains negative on the back of continuing challenges. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets rallied on Wednesday as election results continued to roll in. Asian markets are trading mostly higher in early deals on Thursday following positive close from US markets.

Back home,  extending northward journey for third straight session, Indian equity benchmarks ended the Wednesday’s trade with a gain of around a percent, recapturing their crucial 40,600 (Sensex) and 11,900 (Nifty) levels ahead of the US Presidential election outcome. As per the report, Democratic candidate Joe Biden was leading marginally against Donald Trump. Markets started the session on an optimistic note 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. Markets turned jittery and lost all of their initial gains in middle of the day’s trade as US election verdict could still swing either way. The election has turned out to be much tighter than anticipated with new challenges emerging. Sentiments also weighed down 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. But, buying in last leg of trade helped markets to end above their crucial levels as purchasing managers' index (PMI) for services rising to 54.1 from 49.8 in September. Adding optimism, Finance Secretary Tarun Bajaj stated that Indian economy is recovering fast and will soon be back on rails as all the parameters have started showing improvement. He said ‘we are actually seeing an improvement in all parameters generally and we are expecting further improvement in the month of November and this should continue’. Finally, the BSE Sensex rose 355.01 points or 0.88% to 40616.14, while the CNX Nifty was up by 95.00 points or 0.80% to 11908.50.