Domestic indices likely to make positive start of new week

Indian markets rallied more than 1 percent to end at record high levels on Friday on the back of robust buying in IT and auto stocks. Today, the start of new week is likely to be positive taking lead from other Asian peers. Traders will be taking encouragement with Assocham’s statement that India's economy is showing decisive signs of a V-shaped recovery in 2021 with the return of consumer confidence, robust financial markets, an uptick in manufacturing and exporters braving it out in the global market with never-say-die spirit. Also, IHS Markit said Indian economy is likely to rebound with an 8.9 per cent growth in the fiscal year beginning April 2021 after economic activity showed significant improvement in the last quarter. Some support may come with report that India’s exports grew 16.22 percent YoY to $6.21 billion in the first week of January, mainly driven by healthy growth in pharmaceuticals, and engineering sectors, reflecting signs of revival. Imports during January 1-7 this year too increased by 1.07 percent to $8.7 billion as against $8.6 billion in the same period of 2020. Besides, FPIs have pumped Rs 5,156 crore into Indian capital markets in the first six trading sessions this year amid expectations of strong third-quarter earnings and a reformist budget. As per depositories data, FPIs invested a net Rs 4,819 crore in equities and Rs 337 crore in debt segment between January 1 and 8. Traders may take note of report that India continues to show a downward trend in the new number of coronavirus cases. With tally at 10,467,431, it accounts for the 2nd highest cases of Covid-19 infections globally. Insurance industry stocks will be in limelight with report that the life insurance industry saw a 2.7 per cent contraction in premium collection in December, a second consecutive month of decline. There will be some buzz in oil & gas sector stocks with ratings agency ICRA in its latest report stating that the domestic demand for petroleum products is expected to increase at a healthy rate of 8 to 10 per cent in FY22 on a year-on-year basis. Banking stocks will be in focus as the Reserve Bank of India (RBI) expressed some concerns over zero-coupon bonds for the recapitalisation of public sector banks (PSBs) and discussion is on between the central bank and Finance Ministry to find a solution. There will be some reaction in coal industry stocks with a private report stating that India's coal import declined by 17 per cent to 137.16 million tonne (MT) in the April-November period of the current fiscal. There will be some result reactions too, to keep the markets in action.

The US markets ended higher on Friday as hopes of more stimulus from Washington were shaken a bit by a senator's comments but later bolstered after US President-elect Joe Biden said his economic package will be in the trillions of dollars. Asian markets are trading mostly in green on Monday as trillions in new US fiscal stimulus plans were set to be unveiled this week, stoking a global reflation trade.

Back home, earnings optimism and positive global cues fuelled a broad-based rally in the markets with Sensex and Nifty settling around one and half percent higher each on Friday. Benchmarks made gap-up opening, as sentiments got boost 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 optimism also came 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. Markets extended gains in late afternoon session to end at record high levels, taking support from report indicated that job listings continued to improve in December with industries including telecom, agro-based units, and media and entertainment returning to the pre-COVID-19 levels. Some support also came as the Central Board of Indirect Taxes & Customs (CBIC) has introduced liberalised Authorised Economic Operator package for micro, small and medium enterprises (MSMEs) for swift customs clearances. In order to attract MSMEs to become Authorised Economic Operators (AEOs) and avail various benefits, the CBIC has relaxed the compliance criteria provided the MSMEs have a valid certificate from their line-ministry. Market participants overlooked the government 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. Finally, the BSE Sensex rose 689.19 points or 1.43% to 48,782.51, while the CNX Nifty was up by 209.90 points or 1.48% to 14,347.25.