Markets likely to get cautious start on Thursday

Indian markets ended at record close on Wednesday boosted by buying across all sectors, led by realty, auto, IT and metal indices. Today, the markets are likely to make cautious start amid mixed Asian cues. Rising coronavirus cases is likely to dampen sentiments in the markets. According to Worldometer, India reported 21,861 fresh Covid-19 cases on Thursday pushing the overall tally to 99,54,769. The death toll from the deadly infection jumped to 144,487. Also, there will be some cautiousness with a report released by the United Nations Development Programme (UNDP) showing that India dropped one spot to 131 among 189 countries in the 2020 human development index. However, some respite may come later in the day with Commerce and Industry Minister Piyush Goyal’s statement that the government is making efforts to deregulate the economy with an aim to attract greater investments from across the world. He said the government has opened up defence, manufacturing, mining, finance and capital market sectors. Some support will come as SBI Research scaled up its projections for the economy, projecting gross domestic product (GDP) to contract 7.4 per cent during the current financial year compared to its earlier forecast of a 10.9 per cent fall. Traders may take note of report that the government signed a loan agreement worth $1 billion with the New Development Bank (NDB) to support the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and India’s rural infrastructure. Aviation stocks may come under pressure after the Aviation turbine fuel (ATF) price was raised by a steep 6.3 per cent on Wednesday. Telecom stocks will be in limelight after the Centre set the ball rolling for 4G auction that is expected to fetch the exchequer Rs 3.92 trillion by offering 2,251 megahertz (MHz) airwaves. The coveted 5G spectrum has been kept out of the offer. There will be some reaction in sugar stocks as the government approved a subsidy of Rs 3,500 crore to sugar mills for the export of 60 lakh tonnes of sweetener during the ongoing marketing year 2020-21 as part of its efforts to help them clear outstanding dues to sugarcane farmers.

The US markets ended mostly higher on Wednesday as investors awaited a potential fiscal economic stimulus package and after the US Federal Reserve repeated a pledge to keep its benchmark interest rate near zero. Asian markets are trading mixed on Thursday as investors reacted to the latest announcements from the US Federal Reserve.

Back home, Indian equity benchmarks witnessed strong session on Wednesday and settled at record closing highs level amid positive investor sentiment over roll out of Covid-19 vaccines. The benchmarks staged a gap up opening and held on to gains on the back of a broad-based buying interest. Sentiments got a boost after 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 optimism also came 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, markets trimmed some gains in afternoon deals, as some concern came 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. But, key indices regained strength and posted decent gains, as traders remain energized with Union Road Transport Minister Nitin Gadkari’s statement that India holds huge investment opportunities especially in its vibrant infrastructure sector where projects worth Rs 44 lakh crore are under implementation as part of the Rs 111 lakh crore National Infrastructure Pipeline (NIP). He said as per Prime Minister Narendra Modi's vision focus was being laid on developing a world-class infrastructure under the NIP, which is first-of-its-kind exercise to bolster development. Adding optimism, the Securities and Exchange Board of India (SEBI) in its latest data report has showed that investments through participatory notes (P-notes) in the Indian capital market rose to a 27-month high of Rs 83,114 crore at November-end. Market participants also took a note of Union Minister Piyush Goyal’s statement that the industry and government have to partner to achieve the target of India becoming a $5 trillion economy by 2025. He also expressed confidence in the capabilities of the business community as well as startups which can make India the top economy globally in the next 25-30 years. Finally, the BSE Sensex rose 403.29 points or 0.87% to 46,666.46, while the CNX Nifty was up by 114.85 points or 0.85% to 13,682.70.