Markets likely to get positive start on firm global cues; TCS to announce Q3 result

Indian markets erased day's gains to end lower on Thursday dragged by selling in FMCG, IT and pharma stocks. Today, the markets are likely to make positive start mirroring firm global cues. Traders will be taking encouragement with report that India in 2020 has been one of the biggest and fastest-growing technology markets in the world. Digital and technology adoption in India has been increasing at a steady rate over the last few years, and the current COVID-19 pandemic has accelerated the rate of technology adoption across sectors, including in high involvement services such as education and healthcare. Some support will come with report that the RBI will conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for Rs 10,000 crore each on January 14. The decision was taken after a review of current liquidity and financial conditions. However, traders may be concerned with report that India’s economy is set for its biggest annual contraction in records going back to 1952 as the rapid spread of coronavirus cases and measures to contain them hurt businesses and households. The statistics ministry in its first advance estimate said gross domestic product will shrink 7.7% in the financial year ending March 2021. There may be some cautiousness with private report that India's fiscal deficit for year ending in March is likely to be over 7% of gross domestic product, as revenue collections suffered from a lockdown and restrictions to rein in the spread of COVID-19. Besides, with 18,106 fresh Covid-19 cases, India's caseload now stands at 10,414,044. The country's death toll has mounted to 150,606. Aviation stocks will be in focus as global airlines body IATA said that domestic passenger traffic growth in India was 49.6 percent lower in November last year as compared to the corresponding month in 2019. There will be some reaction in sugar sector stocks with a private report stating that Indian sugar mills are aggressively signing export contracts after New Delhi approved a subsidy for overseas sales and as global prices hit their highest level in 3-1/2 years. Meanwhile, investors will be eyeing the Information technology (IT) major Tata Consultancy Services’ (TCS) December quarter earnings to be released later in the day, which will kick start the earnings season.

The US markets ended notably higher on Thursday as investors bet a Democrat-controlled Congress will deliver more stimulus spending to help the U.S. economy overcome a steep pandemic-induced downturn. Asian markets are trading in green on Friday following overnight gains on Wall Street that hit new record highs.

Back home, Indian equity benchmarks erased all of their initial gains and ended marginally in red on Thursday, ahead of the announcement of advance estimate of gross domestic product (GDP) for financial year of 2020-21 (FY21). The benchmarks staged a gap up opening and traded firmly higher for most part of the day, taking support from Geneva-based World Trade Organisation (WTO) stating that during the period 2015-20, India has implemented several measures to facilitate trade, such as a reduction in the number of documents required and the automation of the customs clearance system for imports and exports. Some support also came with private report stating that in the upcoming union budget for FY 2021-22, the government is likely to announce SWIFT - Special Window for Financial Investors Facilitation - for big foreign investors in India.  SWIFT will cater to global financial investors with an investment proposal of more than Rs 5,000 crore. However, the sudden fall in benchmarks is last hour of trade was due to spike in volatility owing to weekly expiry of index futures and option contracts. Market participants also took a note of ICRA Ratings' report that non-banking finance companies (NBFCs) are likely to see a 7-9 percent growth in their asset under management (AUM) in FY22 but access to funding would be crucial for them to have a sustained improvement. Meanwhile, another report stated that the currency in circulation (CIC) expanded by 22.1 per cent in calendar year 2020, as people hoarded cash at a time when the nation went into a lockdown and uncertainty prevailed over how liquidity needs would be met. Data released by the Reserve Bank of India showed that in calendar year 2020, the currency in circulation growth was way higher than 2019’s 11.8 per cent growth rate. Finally, the BSE Sensex fell 80.74 points or 0.17% to 48,093.32, while the CNX Nifty was down by 8.90 points or 0.06% to 14,137.35.