Domestic markets likely to get optimistic start on Tuesday

Indian markets ended higher on Monday led by gains in banking, metals and realty stocks amid positive global cues. Today, the start of session is likely to be optimistic tracking firm global cues coupled with coronavirus vaccine hopes. Some support will come as Serum Institute of India (SII) CEO Adar Poonawalla said he was hoping for the emergency use approval of AstraZeneca-Oxford University COVID-19 vaccine Covishield by the end of this month or January in the UK and India. FICCI’s report stating that India could benefit from the likely shift in global supply chains from China to other economies in the aftermath of the COVID-19 pandemic, likely to boost sentiments in markets. Traders may take note of a Reserve Bank paper stating that maintaining 4 percent inflation is appropriate for India as targeting a lower rate could impart deflationary bias to the monetary policy. The paper, authored by RBI Deputy Governor Michael Debabrata Patra and another official Harendra Kumar Behera, has found a steady decline in trend inflation to 4.1-4.3 percent since 2014. However, there may be some cautiousness with rising coronavirus cases in the country. With 16,072 fresh Covid-19 cases, India's caseload has now reached 10,224,797. The country's death toll has mounted to 148,190. With 1,922,048 cases, Maharashtra has the highest number of coronavirus cases, followed by Karnataka 916,909, Andhra Pradesh 881,273, Tamil Nadu 815,000, and Kerala 743,563. Meanwhile, the Finance Ministry on Monday released the ninth instalment of Rs 6,000 crore to the states to meet GST compensation shortfall, taking the total amount of fund released to Rs 54,000 crore. There will be some reaction in sugar stocks as Crisil Ratings said the Centre's export subsidy for the October-September sugar season 2020-21 (SS21) will help sustain the commodity's exports at almost last year's level.

The US markets rallied on Monday, as President Donald Trump's signing of a long-awaited $2.3 trillion pandemic aid bill increased optimism for an economic recovery. Asian markets are trading in green on Tuesday as hopes that a long-awaited US pandemic relief package would be expanded and a Brexit trade deal supported investor risk appetites.

Back home, Indian equity benchmarks rose for fourth session in a row on Monday and settled at their record closing highs, led by gains in realty, metal and consumer durables stocks amid positive global cues. The benchmarks staged a gap up opening, as India Ratings revised its projections for economic contraction to 7.8 per cent for 2020-21 from the earlier expectation of 11.8 per cent due to easing Covid-19 headwinds and better than expected numbers in the second quarter of the current financial year. Traders remained optimistic with an article on the state of economy in the RBI Bulletin stated that the economy is coming out of the COVID-19 pandemic's deep abyss faster than most of the predictions, and the growth will enter positive zone in the third quarter of the current financial year. Key gauges maintained their up move in the second half of trading session, taking support from Union Commerce and Industry Minister Piyush Goyal’s statement that the focus on 'Vocal for Local' and manufacturing of value-added products in India can create job opportunities for the youth and boost the country's economic growth. He noted that as consumers emphasize more on quality products and services at the right price manufactured in the country, it will create more jobs for the youth and help in accelerating the growth of the country's economy. Additional support also came with the Centre for Economics and Business Research’s (CEBR) report that India, which appears to have been pushed back to being the world's sixth biggest economy in 2020, will again overtake the UK to become the fifth largest in 2025 and race to the third spot by 2030. Finally, the BSE Sensex rose 380.21 points or 0.81% to 47,353.75, while the CNX Nifty was up by 123.95 points or 0.90% to 13,873.20.