Domestic indices likely to make optimistic start on Wednesday

Indian markets trimmed losses and ended flat on Tuesday led by gains in heavyweights like Bajaj and HDFC twins. Today, the markets are likely to make optimistic start following firm global cues. Traders will be taking encouragement as S&P Global Ratings raised India’s growth projection for the current fiscal to (-) 7.7 percent from (-) 9 percent estimated earlier on rising demand and falling COVID infection rates. It said rising demand and falling infection rates have tempered its expectation of COVID’s hit on the Indian economy. Some support will come as Finance minister Nirmala Sitharaman asserted that the Budget for FY22 will be vibrant enough to sustain economic revival in the aftermath of Covid-19 disruption. However, traders may be concerned with the government data showing that the country's exports dipped 8.74 per cent to $23.52 billion in November on account of contraction in shipments of key sectors like petroleum, engineering, chemicals and gems and jewellery. Besides, trade deficit during the month narrowed to $9.87 billion as imports too declined by 13.32 per cent to $33.39 billion. There may be some cautiousness as India reported 26,401 fresh Covid-19 cases. With this, its case tally now stands at 9,932,908. The country's death toll has mounted to 144,130. With 1,886,807 cases, Maharashtra has the highest number of coronavirus cases, followed by Karnataka 903,425, Andhra Pradesh 876,000, Tamil Nadu 801,161, and Kerala 677,000. Meanwhile, the government has extended the deadline till March 31, 2021 for completing GST anti-profiteering investigations, which were to be completed by November this year. Besides, sugar stocks may be in focus as the Union Cabinet may consider a proposal to provide export subsidy worth Rs 3,600 crore to sugar mills for the marketing year 2020-21 in today's meeting. Auto stocks will be in focus as parliamentary panel on industry recommends a 10% GST reduction for the auto sector to boost demand. The panel has expressed concern about the slowdown in the auto sector that has led to a loss of 3.45 lakh jobs and a loss of 2300 crore per day during the COVID-19 lockdown. There will be some reaction in Chemical industry stocks with Chemicals and Fertilisers Minister D V Sadananda Gowda’s statement that the demand for chemicals and petrochemicals is expected to rise 9 per cent annually, and the size of the industry is likely to grow to $300 billion by 2025.

The US markets ended higher on Tuesday as optimism grew over the prospect of more stimulus. Asian markets are trading in green on Wednesday as hopes of effective coronavirus vaccines and the growing prospect of more US fiscal stimulus cheered investors ahead of the Christmas holiday season.

Back home, after remaining in the negative territory for most part of the session, Indian equity benchmarks managed to settle flat with a positive bias on Tuesday, led by gains in heavyweights Bajaj Finance, Bajaj Finserv, HDFC and Tech Mahindra. The benchmarks opened lower as sentiments remained down-beat with industry body CII stating that the current agitation by farmers has led to supply chain disruptions, which will impact the economy in the coming days and may impinge upon the ongoing recovery from the economic contraction due to COVID-19. Trades overlooked the government data showing that retail Inflation has eased marginally to 6.93% in November due to considerable easing in vegetable prices. Retail inflation had remained above 7 per cent for two month in a row. Market participants also paid no heed towards rating agency CRISIL’s report in which it has projected a slower contraction of 7.7% for the Indian economy in the ongoing fiscal, compared to the 9% forecast in September on the back of faster-than-expected recovery in the second quarter, but called for more fiscal measures to sustain it. However, late buying helped benchmarks erase all intraday losses. Traders found some solace with Commerce and Industry Minister Piyush Goyal’s statement that foreign direct investments (FDIs) into India have been continuously growing as the country has one of the most facilitative policies to attract overseas investors. He said that during April-September 2020, FDI increased 13 per cent to about $40 billion. Some support also came after the Finance Ministry highlighted the economic reforms for growth and development of the country. It said that from January 2021, taxpayers up to the turnover of Rs 5 crore will have the option of filing a quarterly Goods and Service Tax Returns (GSTR) under QRMP Scheme i.e. Quarterly Returns Monthly Payment Scheme. Finally, the BSE Sensex rose 9.71 points or 0.02% to 46,263.17, while the CNX Nifty was up by 9.70 points or 0.07% to 13,567.85.