Markets likely to get optimistic start on firm global cues

Indian markets ended higher Tuesday led by strong gains heavyweight IT stocks and PSU Banks amid mixed global cues. Today, the markets are likely to get an optimistic start tracking firm global cues. Market participants will track developments on the Covid and vaccine front. An expert panel is set to today review the applications of Bharat Biotech, Pfier-BioNTech and Serum Institute of India seeking emergency use authorisation for their vaccines. India's Covid-19 case tally has increased to 97.35 lakh while death toll has mounted to 1.4 lakh, according to Worldometer. Some support will come with Finance Minister Nirmala Sitharaman’s statement that India will not worry about missing its budget deficit target as it seeks to step up spending to support the economy. Traders may take note of report that India Ratings and Research expects interest rates to stabilise at the current level and the Indian currency to undergo structural changes. There may be some cautiousness with NITI Aayog CEO Amitabh Kant’s statement that it is difficult to carry out tough reforms in India as there is too much of democracy, and emphasised that more reforms need to be done to make the country competitive. He also said it is not easy to compete against China without hard reforms. Auto stocks will be in limelight as automobile dealers' body FADA said passenger vehicle (PV) retail sales in November witnessed a year-on-year increase of 4.17 per cent to 2,91,001 units as Diwali-Dhanteras period led to rise in vehicle registrations. Financials and bank stocks will once again be in focus as the Supreme Court will continue its hearing in the interest waiver case today. There will be some reaction in defence related stocks with report that the Union government on December 8 issued another notification regarding changes in the Foreign Exchange Management Act permitting FDI in defence production up to 74 per cent under the automatic route.

The US markets ended higher on Tuesday boosted by gains in the healthcare sector on the back of positive vaccine news and seeming progress on US stimulus talks. Asian markets are trading in green on Wednesday as a coronavirus vaccine rollout commenced in the U.K., fueling some of the optimism among investors.

Back home, Indian equity benchmarks ended Tuesday's volatile session on a positive note amid buying in counters such as Ultratech Cement, TCS, Reliance Industries and Infosys. Markets made slightly positive start and soon extended gains, as sentiments got a boost with Niti Aayog vice chairman Rajiv Kumar’s statement that the government is committed to improving the ease of doing business and innovation ecosystem where every school student has access to the innovative tools and trends. Traders also took note of report that companies raised Rs 73,215 crore from the capital markets in October, with private placement of debt instruments continuing to be the most-preferred route for funding. However, key indices erased gains and traded flat in afternoon session, even as Fitch Ratings revised up India’s GDP projection to a contraction of 9.4 per cent due to a strong economic recovery in the second quarter of the current fiscal year. It earlier suggested that India’s GDP may shrink by 10.5 per cent in the FY21. Fitch Ratings further projected an 11 per cent growth and 6.3 per cent growth in the following years. But, markets regained their positive momentum to end higher, as some optimism remained among traders with Union Health Minister Harsh Vardhan’s statement that more than 100 startups have provided innovative products and solutions to overcome challenges posed by the pandemic. Finally, the BSE Sensex jumped 181.54 points or 0.40% to 45,608.51, while the CNX Nifty was up by 37.20 points or 0.28% to 13,392.95.