Benchmarks likely to make optimistic start amid firm global cues

Indian markets ended at record-high levels on Tuesday on the back of positive developments over the COVID-19 vaccine that has boosted investors' risk appetite amid growing prospects of speedy global economic recovery. Today, the start of session is likely to be optimistic tracking firm trade in Asian peers and overnight gains on Wall Street. Traders will be taking encouragement as Nilesh Shah, a part-time member of the economic advisory council to the Prime Minister, said the GDP contraction will improve to higher single digits in the September quarter, and the economy will be back to positive growth by the March quarter. Market participants may also track the Union Cabinet meeting, scheduled for later today, where the Centre may consider a proposal to infuse Rs 6,000 crore into the National Investment and Infrastructure Fund. However, investors may be concerned with report that India reported 44,276 fresh Covid-19 cases in the last 24 hours, taking its tally to 9,221,998. The country's death toll mounted to 134,743. There may be some cautiousness with S&P Global Ratings’ statement that non-performing loans in the Indian banking sector is likely to witness an uptick and may shoot up to 11 per cent of gross loans in the next 12-18 months. Aviation industry stocks will be focus with ICRA’s report that the Maharashtra government’s decision to make coronavirus negative report mandatory for those entering the state from four certain states is expected to impact the domestic travel demand further. There will be some buzz in automobile industry stocks with Ind-Ra’s report that India's two-wheeler exports will see sustained growth in the second half of next fiscal after witnessing temporary hurdles in the first half this year due to COVID-19 and weakened crude oil prices, hurting the economies of key exporting destinations. Infrastructure stocks will be in limelight as the Union Cabinet is likely to consider a proposal to infuse Rs 6,000 crore into the National Investment and Infrastructure Fund (NIIF), a move which will help the entity raise Rs 1.10 lakh crore by 2025 for financing infrastructure projects. There will be some reaction in mining industry stocks with ICRA’s report that the domestic mining & construction equipment (MCE) industry has staged a strong recovery since late June 2020, posting a year-on-year growth of 20-22 per cent in Q3 of CY20.

The US markets settled higher on Tuesday as investors anticipated a 2021 economic recovery on coronavirus vaccine progress and the formal clearance for President-elect Joe Biden’s transition to the White House. Asian markets are trading in green on Wednesday following a record session on Wall Street as coronavirus vaccine hopes and reduced uncertainty in US politics buoy investor sentiment.

Back home, continuing their gaining streak, Indian equity benchmarks ended at a record close on Tuesday with Nifty crossing the 13,050-mark for the first time ever, following advances in global peers largely because signs of progress on a COVID-19 vaccine which in turn spurred hopes for a faster economic recovery. Benchmarks made optimistic start and traded in fine fettle, as sentiments got a boost as Finance Minister Nirmala Sitharaman assured the industry that momentum of economic reforms will continue to make India a hotspot of global investment. Some positivity also came as Care Ratings said the economy is expected to throw up better numbers in the September quarter with GDP contraction of 9.9 per cent, as against 24 per cent in Q1 at the onset of the pandemic. Frontline gauges extended their upside in second half of trading session, as sentiment perked up with chief economic adviser (CEA) -- Krishnamurthy Subramanian’s statement that India is likely to report a current account surplus at the end of the current financial year ending in March 2021, mainly led by a fall in imports. Adding optimism among investors, Niti Aayog CEO Amitabh Kant said that unprecedented reforms undertaken on both governance and economic fronts by the government will usher in a new era of growth and prosperity. He also stressed the need to increase expenditure on research and development and strengthen intellectual property rights (IPR) laws. Traders overlooked 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. Finally, the BSE Sensex rose 445.87 points or 1.01% to 44,523.02, while the CNX Nifty was up by 128.70 points or 1.00% to 13,055.15.