Benchmarks likely to make negative start; IIP, CPI data eyed

Indian markets extended gains for the eighth straight session to end at a record level on Thursday led by pharma and metal stocks amid strong global cues. Today, the start of session is likely to be negative amid mixed cues from global markets. Investors will be eyeing the macro economic data -- industrial production and inflation data -- scheduled to be announced later in the day. Traders will be concerned with the RBI’s statement that the GDP is likely to contract by 8.6 percent for the July-September period, which means India will enter into a recession for the first time in history in the first half of this fiscal with two successive quarters of negative growth due to the COVID-19 pandemic. There will be some cautiousness with rating agency ICRA’s report that the aggregate debt of 12 major states is estimated to worsen significantly, and their capital spending might decline sharply because of lower-than-expected goods and services tax (GST) revenue and shortfall in Centre’s devolution. It added that this could lead to a 1-2 per cent contraction in Q4FY21. However, some respite may come later in the day as marching on the mission of making in India, the Prime Minister Narendra Modi-led Union Cabinet announced Rs 2 lakh crore of production linked incentives for 10 major manufacturing sectors. Traders may be taking encouragement as the Reserve Bank of India said the Indian economy could break out of contraction and return to positive growth by the third quarter of the current financial year if the growth momentum sustains. Some support may come with commerce and industry minister Piyush Goyal’s statement that India’s exports grew 22.5% on year to $6.75 billion in the first week of November. There will be some buzz in tractor manufacturing companies stocks with ratings agency Crisil’s report that domestic tractor sales volume should recover faster than expected with the industry estimated to grow 10-12 per cent in the current financial year against earlier projection of one per cent de-growth. Aviation stocks will be in focus with Civil Aviation Minister Hardeep Singh Puri’s statement that the cap on the number of domestic flights that Indian airlines are permitted to operate was increased from 60 per cent to 70 per cent of their pre-COVID levels. There will be some reaction in oil & gas sector stocks as OPEC said global oil demand will rebound more slowly in 2021 than previously thought because of rising coronavirus cases, hampering efforts by the group and its allies to support the market. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended mostly higher on Wednesday as investors switched back to technology stocks and away from economically sensitive sectors as they weighed COVID-19 vaccine progress against a virus surge and likely timing for a economic rebound. Asian markets are trading mixed on Thursday tracking mixed cures from Wall Street overnight.

Back home, Indian equity benchmarks witnessed a significant bout of volatility but ended at yet another record closing high on Wednesday amid broad-based buying, thus settling in the green for the eighth session in a row. Markets made an optimistic start and traded over half percent higher, tracking largely positive cues from global markets and strong foreign fund inflows. Traders took encouragement as the health ministry said the National Expert Group on Vaccine Administration for COVID-19 is in conversation with all vaccine manufacturers, including domestic and foreign ones, a day after Pfizer Inc. and BioNTech SE announced more than 90 per cent efficacy of their potential vaccine for the coronavirus. Support also came as Commerce and Industry Minister Piyush Goyal and Minister of State Hardeep Singh Puri held a virtual dialogue with their UK counterparts to review the progress towards a post-Brexit Enhanced Trade Partnership with Britain, which could lead to a free trade agreement in the future. However, key gauges slipped into the red in the middle of the session, as some cautiousness came with Rating agency ICRA’s report that states are likely to cut capital outlay on infrastructure by up to 40 percent, with coronavirus disease (covid-19) pandemic severely impacting revenues of state governments, and additional expenditure towards healthcare and public welfare. But, domestic markets managed to recoup all its losses to end near the highest point of the day, taking support from Crisil Ratings in its latest report stated that revenue of the agrochemical sector is likely to grow 12-14 per cent in the ongoing financial year (FY21) on the back of sharp recovery in offtake from domestic agriculture sector and continuing healthy exports. Meanwhile, the Centre government has released Rs 6,195 crore as the eight equated monthly installment of post-devolution revenue deficit grants to 14 states. The 14 states included Andhra Pradesh, Assam, Himachal Pradesh (HP), Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, Tamil Nadu, Tripura, Uttarakhand and West Bengal. Finally, the BSE Sensex rose 316.02 points or 0.73% to 43,593.67, while the CNX Nifty was up by 118.05 points or 0.93% to 12,749.15.