Markets likely to get cautious start on Wednesday

Indian markets ended at record closing highs on Tuesday after a long weekend, following gains in Asian peers, as news of another promising coronavirus vaccine lifted hopes. Today, the markets are likely to make a cautious start as investors remain concerned about rising cases of coronavirus worldwide amid mixed Asian cues. Traders will be concerned as India reported 38,532 fresh Covid-19 cases in the past 24 hours. The total caseload now stands at 8,912,704. The country's death toll has mounted to 131,031. Delhi recorded 6,396 fresh Covid-19 cases taking the infection tally in the national capital to over 495,000 on Tuesday. However, some respite may come later in the day after private report upgraded its India GDP forecast to a contraction of 10.3 per cent in FY21, as against its earlier estimate of a negative growth of 14.8 per cent. The US-based firm said developments on the vaccine front -- where two candidates have posted satisfactory progress -- will be very helpful in the recovery. Traders may take note of report that Prime Minister Narendra Modi is keen to attract foreign investment to modernize India’s urban centers as the world’s second-most-populous nation rebuilds its economy after the coronavirus pandemic halted activity. There will be some buzz in sugar stocks as industry body ISMA said sugar production in India, the world's second-largest producer of the sweetener, surged nearly three-folds to 14.10 lakh tonnes in the 2020-21 season so far due to better crop output and timely commencement of the crushing operation. There will be some reaction in oil & gas sector companies stocks after India's oil minister Dharmendra Pradhan asked exploration companies to consider farming out their acreages to global players with advanced technology to expedite development and raise oil and gas output. Banking stocks will be in focus after the central government put Lakshmi Vilas Bank under moratorium till December 16, 2020. That said, the RBI proposed to merge LVB with the India subsidiary of Singapore's DBS Bank. Furthermore, the Supreme Court is scheduled to hear the interest waiver case later today. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended lower on Tuesday as retail sales data disappointed and more states imposed restrictions to tamp down an unrelenting surge in Covid-19 cases. Asian markets are trading mixed on Wednesday, investors remained cautious as coronavirus cases continued to surge despite vaccine hopes.

Back home, the bulls continued to maintain their firm grip on Tuesday as Indian equity benchmarks gained over 0.70 percent each to settle at record closing highs, led by positive sentiments in the broader Asian markets. Markets made optimistic start and traded in green terrain for whole day, as investor sentiment was bolstered by news that US drug maker Moderna's coronavirus vaccine was 94.5 per cent effective in preventing COVID-19 infection. Sentiments also got a boost 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, in late morning session, key gauges erased some of their initial gains with government data showing that 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. Also, 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. But, domestic indices regained upward momentum in second half of the trading session, taking support from Chairman Supratim Bandyopadhyay’s statement that pension fund regulator PFRDA will propose to the government to make employers' contribution of 14 per cent under NPS tax free for all categories of subscribers in the next Budget. Employers' contribution of 14 per cent in pension under the National Pension System (NPS) scheme for the central government employees was made tax free from April 1, 2019. Some support also came after Foreign portfolio investors (FPIs) have invested a massive Rs 35,109 crore in Indian markets in November so far as corporate earnings and reforms measures undertaken by the government to revive investment activities. Market participants also took a note of Fitch Solutions’ report that India's third tranche of stimulus measures (Stimulus 3.0) should support economic rebound over the coming quarters but the actual fiscal impact is difficult to ascertain. Finally, the BSE Sensex rose 314.73 points or 0.72% to 43,952.71, while the CNX Nifty was up by 93.95 points or 0.74% to 12,874.20.