Markets likely to get flat-to-positive start on Tuesday

Indian markets ended higher on Monday helped by gains in IT and energy stocks. Today, the start of session is likely to be flat-to-positive amid positive global cues on hopes of COVID-19 vaccine. AstraZeneca said its Covid-19 vaccine, cheaper to make, easier to distribute and faster to scale-up than its rivals, could be as much as 90 per cent effective. Traders will be taking encouragement with Niti Aayog CEO Amitabh Kant’s statement that unprecedented reforms undertaken on both governance and economic fronts by the government will usher in a new era of growth and prosperity. Kant also stressed the need to increase expenditure on research and development and strengthen intellectual property rights (IPR) laws. Some support will come as Finance Minister Nirmala Sitharaman assured the industry that momentum of economic reforms will continue to make India a hotspot of global investment. Traders may take note of Chief Economic Adviser Krishnamurthy Subramanian’s statement that India is likely to report a current account surplus in the current financial year ending in March 2021, mainly because of a moderation in imports in the wake of the COVID-19 pandemic-led economic slowdown. However, traders may be concerned as India reported 37,329 fresh Covid-19 cases, taking its tally to 9,177,641. The country's death toll has mounted to 134,251. There may be some cautiousness with S&P Global Ratings’ statement that the recommendations made by the Reserve Bank of India's (RBI) working group on allowing corporate ownership in banks given India's weak corporate governance amid large corporate defaults over the past few years pose a potential risk. Stocks of diagnostic and healthcare tests firms will be in focus after the Maharashtra government said all air and rail passengers arriving from Delhi, Gujarat, Rajasthan, and Goa need to carry Covid-19 test report before entering the state. There will be some reaction in insurance stocks with a private report that non-life insurers have seen a 14.5 per cent increase in premium collection in the health segment between April and October this year, reflecting the need for health insurance in the country grappling with a surge in Covid-19 cases.

The US markets closed in green on Monday boosted by positive vaccine news. Asian markets are trading higher on Tuesday as Covid-19 vaccine progress shored up global sentiment and US President-elect Joe Biden was given the go-ahead to begin his White House transition.

Back home, in a volatile session, Indian equity benchmarks rose for second straight session and settled with notable gains on Monday, with Sensex and Nifty recapturing their crucial 44,050 and 12,900 levels respectively. The benchmarks staged a gap up opening, amid sanguine global cues. Sentiments also got a boost with Industry body FICCI's latest quarterly survey on manufacturing showing that India's manufacturing sector is poised to witness recovery in the July-September quarter, even as hiring outlook for the segment remains bleak. The proportion of respondents reporting higher output during July-September rose to 24 per cent, as compared to 10 per cent in the previous quarter. Some support also came as a senior official of the Ministry of External Affairs said that Atmanirbhar Bharat provides a vision of India's plans to become a $5 trillion economy by promoting 'Make in India - Make for World' and this will happen through an integration with the global economy. However, volatility witnessed in late morning session as the benchmarks erased initial gains, as investors' feared about government imposing lockdowns again to curb the spread of Covid-19 which has been spreading at a faster pace in cities like Delhi. There was some cautiousness too with report that as many as 437 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns of over Rs 4.37 lakh crore. But, buying in index heavyweights like ONGC, Indusind Bank and Infosys helped benchmarks recover and close higher. Adding to the optimism, Fitch Ratings said the government's coronavirus pandemic-driven renewed reform agenda has the potential to raise India's medium-term growth rate. It also noted that raising medium-term growth rates under these circumstances will require reforms to support investment and boost productivity and it will take time to assess whether the reforms are implemented effectively. Finally, the BSE Sensex rose 194.90 points or 0.44% to 44,077.15, while the CNX Nifty was up by 67.40 points or 0.52% to 12,926.45.