Markets to get optimistic start on Covid-19 vaccine hopes

Indian markets ended modestly higher on Friday despite mixed global cues and worrying inflation data for October. Indian equity, currency and debt markets remain closed on Monday for Diwali Balipratipada. Today, the markets are likely to make optimistic start on vaccine hopes tracking gains in global markets. Traders will be taking encouragement as US-based biotechnology firm Moderna Inc said its vaccine candidate has been found to be 94.5 percent effective in preventing COVID-19, based on Phase 3 trials. Some support will also come with a private report that the Indian economy is seen recovering faster than expected and the Reserve Bank is likely to have come to an end of the rate easing cycle. However, market participants may be concerned with government data India's exports fell 5.12 per cent to $24.89 billion in October, after recording positive growth in September, on account of drop in shipments of petroleum products, gems and jewellery, leather and engineering goods. Besides, trade deficit in October narrowed to $8.71 billion as against $11.75 billion in the corresponding month a year ago. There may be cautiousness with government data showing that the wholesale price-based inflation rose to an eight-month high of 1.48 percent in October, as manufactured products turned costlier. The WPI inflation was 1.32 percent in September and zero percent in October last year. This is the highest level of Wholesale price index-based (WPI) inflation since February when it was 2.26 percent. There will be some buzz in aviation stocks as Civil aviation minister Hardeep Singh Puri said that domestic aviation operations reached a new high on occasion of Diwali as 2,25,097 passengers flew on 1,903 flights. Gold relates stocks will be in focus with data from the Commerce Ministry showing that gold imports, which have a bearing on the current account deficit, declined 47.42 percent to $9.28 billion during April-October due to fall in demand in the wake of the COVID-19 pandemic. There will be some reaction in mining industry stocks with report that the Centre is planning to come out with the proposed mining reforms in a month or so and the auction of mineral blocks will kickstart two to three months after the amendments take place. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended higher on Monday following more upbeat news on the coronavirus vaccine front, with Moderna (MRNA) reporting positive results from a trial of its vaccine candidate. Asian markets are trading mostly in green on Tuesday as vaccine hopes once again lifted Wall Street to record highs.

Back home, Indian equity benchmarks ended Friday's session, the last trading day of Samvat 2076 on a positive note after oscillating between gains and losses during the day, led by buying interest in metal, realty and healthcare shares. The benchmarks had a gap-down opening, as data released by the government showing that retail inflation inched up to 7.61 per cent in October, remaining above the comfort level of the Reserve Bank. Inflation stood at 7.27 per cent in September 2020. It was 4.62 per cent in October 2019. The rise in general inflation was mainly on account of elevated food prices. Volatility struck bourses in late morning session as traders remained concerned with report that India has reported 43,861 fresh Covid-19 cases in the past 24 hours. The total caseload now stands at 8,727,900. The country's death toll has mounted to 128,686. However, local indices gave up all of their initial losses and managed to close in green, as industrial production, measured on the basis of Index of Industrial Production (IIP), grew slightly by 0.2 per cent in September 2020 with higher output of mining and power generation sectors. The IIP had contracted by 4.6 per cent in September 2019, while 7.36 per cent contraction posted in August 2020. Some support also came with Finance Minister Nirmala Sitharaman’s statement that perishable goods are putting upward pressure on inflation and the government is working on both short and medium-term measures for controlling price rise. Adding to the optimism, auto industry body SIAM said that the stimulus measures announced by the government would help in accelerating economic activity in many critical sectors. It appreciates the proactive role being played by the government for supporting a quick and sustainable revival of the economy. Finally, the BSE Sensex rose 85.81 points or 0.20% to 43,443.00, while the CNX Nifty was up by 29.15 points or 0.23% to 12,719.95.