Markets likely to get cautious start amid mixed Asian cues

Indian markets ended a percent higher each on Tuesday led by gains in metal, IT and pharma sectors. Today, the markets are likely to make a cautious start tracking mixed cues from Asian peers. Traders may take note of a private report that the Reserve Bank of India monetary policy committee is expected to leave interest rates unchanged when it meets on Friday, after data showing the economy contracting less than expected and persistently high inflation. The RBI's monetary policy committee will today begin its bi-monthly meeting, the resolution of which would be announced on December 4. Though, traders may be taking encouragement with report that the Organization for Economic Co-operation and Development (OECD) has raised prospects of India’s economy by pegging contraction at 9.9 per cent, against 10.2 per cent it projected in September. Some optimism may come as the gross Goods and Services Tax (GST) collection for November stood at Rs 1.04 lakh crore, 1.4 percent higher than the sum collected in the same month last year. Some support may come as the finance ministry said investors continue to trust the Indian growth story despite Covid-19, and rolled out statistics on foreign portfolio investment (FPI), foreign direct investment (FDI), and corporate bond markets to buttress its claims. Besides, on Tuesday, India reported a significant drop in the number of fresh Covid-19 cases. Its case tally now stands at 9,499,710. The country's death toll has mounted to 138,159. There will be some buzz in the insurance sector stocks as latest data by the General Insurance Council (GIC) showed that foreign direct investment (FDI) in the general insurance sector slipped marginally to Rs 509.07 crore in FY 2019-20 from the previous year. Meanwhile, Burger King India, the quick-service restaurant chain, is set to launch its initial public offer (IPO) for subscription on December 2. This would be the fourteenth IPO in the current year. The issue will close on December 4 and the shares are likely to list on December 14.

The US markets ended higher on Tuesday as investors grow increasingly hopeful about a vaccine to combat rising Covid-19 cases. Asian markets are trading mixed on Wednesday after Wall Street indices closed at record highs as investors grow increasingly hopeful about a vaccine to combat the pandemic and an economic recovery.

Back home, Tuesday turned out to be a fabulous day of trade for Indian equity benchmarks, where frontline gauges traded jubilantly throughout the day and garnered gains of over a percentage point each. Markets made a cautious start on report that output of eight core infrastructure sectors dropped 2.5 per cent in October, mainly due to decline in production of crude oil, natural gas, refinery products and steel. The production of eight core sectors had contracted 5.5 per cent in October 2019. But, soon after a cautious start, key gauges gained traction and started moving northward as signs of recovery in India’s economic growth supported the market sentiments. India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on consumer demand bouncing back. Adding more optimism, data from the Department for Promotion of Industry and Internal Trade (DPIIT) showed that FDI inflow rose 15 per cent during the April-September period to $30 billion (Rs 2.2 trillion) as compared to inflows of $26 billion during the same period last fiscal, with India being an attractive destination for foreign funds despite the pandemic. Markets extended rally to end near intraday highs, as traders took encouragement with Fitch Solutions’ statement that after a COVID-19 pandemic-led contraction in consumer spending in 2020, household spending will return to growth in 2021, expanding by as much as 6.6 percent. Meanwhile, India has reported a significant drop in the number of fresh Covid-19 cases, taking its tally to 9,463,254. The country's death toll stands at 137,659. Sentiments were positive, even after Indian manufacturing sector lost momentum in the month of November, amid slower increases in factory orders, exports, buying levels and output. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 56.3 in November as against 58.9 in October, although it well above the 50-level that separates growth from contraction. Traders paid no heed towards report that the Union government's fiscal deficit further widened to Rs 9.53 lakh crore, which is nearly 120 per cent of the annual budget estimate, at the end of October of the current financial year. The deficit widened mainly on account of poor revenue realisation. Finally, the BSE Sensex rose 505.72 points or 1.15% to 44,655.44, while the CNX Nifty was up by 140.10 points or 1.08% to 13,109.05.