Markets to make weak start on Friday

Indian markets ended in the red on Thursday after hitting record highs in intra-day deals mainly dragged by banking, metals and IT stocks. Today, the markets are likely to make weak start tracking their Asian peers. There will be some cautiousness as India recorded 13,701 fresh cases of the coronavirus disease (Covid-19). The total number of active cases in the country has fallen to 10,625,420, while the caseload tally stands at 10,625,420. Globally, more than 98 million people have been infected by the virus. The country continues to be second-most-affected globally, and ranks 13th among worst-hit nations by active cases. The five most affected states by total cases are Maharashtra (1,994,977), Karnataka (933,077), Andhra Pradesh (886,245), Kerala (857,380), and Tamil Nadu (831,866). However, some respite may come later in the day as in its latest assessment of the economy, the Reserve Bank of India indicated that the Indian economy has further recovered and estimates the Gross Domestic Product (GDP) to turn positive in the third quarter. Some support may come with a private report that even as India's hiring activities declined last year due to the coronavirus pandemic, there is a sudden increase in demand with about 53 per cent of companies saying they are planning to increase their headcounts in 2021. Traders may take note of report that the Reserve Bank of India (RBI) continued to remain a net buyer of the US currency in November after it bought $10.261 billion from the spot market. Meanwhile, Union Health Ministry said the number of healthcare workers who have received COVID-19 vaccine jabs in India till the evening of the sixth day of the nationwide immunisation drive has reached 9,99,065 as per provisional reports. There will be some reaction in logistics industry stocks with ICRA’s report that pressure on earnings and credit metrics of logistics entities, especially the smaller, unorganised players, is expected to continue over the near-term. However, it said growth over the medium-term is expected to gain momentum. Agriculture sector stocks will be in focus as the government plans to expand area under cultivation for summer-crops by 50% from 3.4 million hectares in 2020 to 5.1 million hectares in 2021. Traders will also be eyeing some important earnings announcement including that of Reliance Industries.

The US markets ended higher on Thursday propelled by optimism about more pandemic relief under the Biden administration. Asian markets are trading mostly in red on Friday as investors assessed earnings, prospects for stimulus and escalating coronavirus cases.

Back home, profit booking which emerged in last leg of trade dragged benchmarks lower on Thursday. Markets made an optimistic start with Sensex breaching 50K mark for the first time ever as sentiments remained upbeat after report that the Department for Promotion of Industry and Internal Trade (DPIIT) has launched a regulatory compliance portal that will act as a bridge between citizens, industries and the government to minimize burdensome compliances. It will also act as a first-of-its-kind central online repository of all central and state-level compliances. Traders took note of Fitch Ratings’ report that India’s medium-term growth potential is at around 6.5% but weak implementation of reforms, combined with continued financial sector problems, could lower its potential. It said the revival of the reform agenda is among the Indian government’s policy responses to the Covid pandemic shock. Also, Traders took note of private report stating that the India eyeing to start negotiations on an investment deal with the European Union simultaneously with a trade agreement in a renewed push to boost bilateral ties with the trade bloc. However, markets witnessed a sharp fall in last leg of trade which dragged both Sensex and Nifty lower as traders turned pessimistic amid reports of a fire in the Serum Institute of India plant in Pune. The selloff was so brutal that Sensex and Nifty lost their crucial 49,400 and 14,550 marks, respectively. But, key gauges fount some support near those levels and pared some of their losses in dying hour of trade after Officials have said the Covid vaccine production has not been affected by the fire and this is not the building where Covishield vaccine is being manufactured. The Serum Institute of India is manufacturing the Covishield vaccine developed by the Oxford University and AstraZeneca. Covishield is one of the two Covid-19 vaccines that have been granted emergency use approval in India. Finally, the BSE Sensex fell 167.36 points or 0.34% to 49,624.76, while the CNX Nifty was down by 54.35 points or 0.37% to 14,590.35.