Benchmarks to start final day of 2020 on negative note

Indian benchmark equity indices ended at record levels on Wednesday led by gains in metal and auto stocks. Today, the markets are likely to make pessimistic start of the final day of 2020, as traders will remain concern on report that total liabilities of the government increased to Rs 107.04 lakh crore at end-September 2020 from Rs 101.3 lakh crore at end-June 2020. This represented a quarter-on-quarter increase of 5.6 per cent in Q2 FY21. Public debt accounted for 91.1 per cent of total outstanding liabilities at end-September 2020. The weighted average yield on primary issuances of dated securities showed further moderation to 5.80 per cent in Q2 of FY21 from 5.85 per cent in Q1 FY21. Meanwhile, India’s current account surplus moderated to $15.5 billion (2.4 per cent of Gross Domestic Product) in quarter ended September 2020 (Q2FY21) from $19.2 billion (3.8 per cent of GDP) in (Q1FY21). The current account balance was in deficit to the tune of $7.6 billion in Q2 of 2019-20 (1.1 per cent of GDP). Besides, FIEO said that the country's exports may reach USD 290 billion by the end of this fiscal as the outbound shipments were hit hard by the COVID-19 pandemic during the first half of the year. However, some support will come as the commerce ministry said an import monitoring system is being developed for several sectors, including aluminium, copper, footwear, furniture, sports goods, and gym equipment. The system would help gather advanced information on imports of these products and make it available to the stakeholders, including government and domestic industries. The system is already in place for steel and coal.  Traders may take note of report that President Vladimir Putin expressed hope that next year Russia and India would continue to work towards stepping up constructive bilateral cooperation as well as coordinating efforts to address topical issues on the regional and global agendas.

US markets ended higher as $600 stimulus checks were set to hit the bank accounts of millions of Americans later this week. Asian markets are trading mostly higher in early deals on Thursday.

Back home,  a decent recovery in the final hour of the trade helped Indian equity benchmarks extend their winning streak to the sixth straight day, led by gains in Basic Materials, Auto, Realty and Metal stocks. The benchmark indices made positive start, but quickly pared the gains and spent rest of the session fluctuating between gains and losses, as traders remained anxious with reports that India witnessed a slight rise in fresh Covid cases with 20,529 cases. India's caseload now stands at 10,245,326. India had reported six cases of new coronavirus variant. But the government said the existing vaccines for Covid-19 will protect against the new variants as there is no evidence to prove otherwise. Sentiments remained in lackluster mood with the Reserve Bank of India (RBI) in its Report stated that the profitability of non-banking finance companies (NBFCs) may be ‘dampened’ going ahead due to the loan impairment and lower credit demand. But, it said many NBFCs have made additional provisioning as per expected credit loss (ECL) norm; and bolstered their capital position by ploughing back dividends. However, late buying and positive trends in the European stocks helped the indices rebound and end at record closing high levels. Some respite also came with Former RBI Governor Duvvuri Subbarao Rao’s statement that though Covid -19 and the subsequent lockdown left a trail of economic devastation on most countries, India can potentially build upon three positive aspects- push in the rural economy, stronger federalism and a huge consumption base. Adding to the optimism, government approved the 15th tranche of electoral bonds which will be open for sale between January 1 and January 10. Electoral bonds have been pitched as an alternative to cash donations made to political parties as part of efforts to bring transparency in political funding. Finally, the BSE Sensex rose 133.14 points or 0.28% to 47,746.22, while the CNX Nifty was up by 49.35 points or 0.35% to 13,981.95.