Benchmarks to make positive start; all eyes on RBI Governor's speech

Indian markets closed around 1 percent lower on Tuesday following weak global cues, selling by foreign institutional investors (FIIs) and concern over spiralling coronavirus infections. Today, the start of session is likely to be positive tracking gains in Asian peers. Traders will be eyeing the RBI Governor Shaktikanta Das’ unscheduled speech at 10 am today as the nation faces an unrelenting second wave of Covid-19 pandemic. Some support will come with report that Brihanmumbai Municipal Corporation (BMC) received a fresh stock of one lakh COVID vaccine doses and it will resume vaccination of people above 45 years at government vaccination centres. Upbeat earning from several companies may also support the market sentiments. However, traders may be concerned as India reported 382,691 fresh Covid-19 cases. With this, the cumulative caseload stands at 20,658,234, Worldometer showed. There may be some cautiousness as S&P Global Ratings said an ongoing second wave of COVID-19 infections in India could hurt its near-term economic recovery and possibly diminish growth for the full year. It added that India's COVID wave will inevitably hit the recovery and could push growth below 10%. Also, Wall Street brokerage Goldman Sachs has lowered its estimate for India's economic growth to 11.1 per cent in fiscal year to March 31, 2022, as a number of cities and states announced lockdowns of varying intensities to check spread of coronavirus infections. There will be some reaction in telecom stocks as the Department of Telecom approved applications of telecom companies -- Reliance Jio, Bharti Airtel, Vodafone and MTNL -- for conducting 5G trials but none of them will be using technologies of Chinese entities. Auto stocks will be in focus with a private report that auto sales in April have started showing the impact of lockdowns that has put the brakes on the recovery of the sector. With more states announcing lockdowns and some more OEMs expecting to go for maintenance shutdowns, as many as 50 per cent of the dealers are likely to be impacted by the move. IT stocks will be in limelight as computer major Dell and contract manufacturers Foxconn, Wistron and Flextronics are among the 19 companies that have filed their applications under the production linked incentive (PLI) scheme for IT hardware.

The US markets ended mostly lower on Tuesday as investors dumped megacap growth stocks to seek shelter in more defensive parts of the market, amid concerns on rising interest rate and uncertainty over an upcoming jobs report. Asian markets are trading mostly in green on Wednesday amid thin trade due to holidays in Japan, China and South Korea.

Back home, Tuesday turned out to be a disappointing day of trade for Indian equity benchmarks where frontline gauges failed to hold on to their early gains and ended the day near intraday lows with Sensex and Nifty ending below their crucial 48,300 and 14,500, respectively. Sentiments remained optimistic amid report that Indian exporters are expecting continuous growth in the country's outbound shipments despite increase in COVID-19 cases as their order books are encouraging and there is a pick-up in demand in rich markets. Federation of Indian Export Organisations (FIEO) President S K Saraf said that in most of the states, manufacturing and exports related services have been exempted from the restrictions and inter-state movement of cargo is permitted by the central government. However, selloff in late afternoon mainly played spoil sports for domestic markets as traders turned pessimistic after Goldman Sachs has lowered its estimate for India's economic growth to 11.1 per cent in fiscal year to March 31, 2022, as a number of cities and states announced lockdowns of varying intensities to check spread of coronavirus infections. Traders also remained concerned after CMIE's managing director and chief executive Mahesh Vyas said the situation on the employment front is expected to continue to remain challenging going forward as well. He said ‘in the month of April, compared to March, we have lost 75 lakh jobs. That is what has caused the jump in the unemployment rate’. The national unemployment rate touched 7.97 per cent as per the Centre's proprietary data, with urban areas witnessing higher stress at 9.78 per cent and rural joblessness at 7.13 per cent. Adding more pessimism, domestic agency India Ratings and Research expects the overall recovery path to be pushed back for most of the service-oriented sectors to FY22, owing to a major supply-side disruption from the second wave of COVID-19 infections. Markets made an optimistic start and traded in green terrain for most part of the day as the country reported a decline in new coronavirus cases for the third day running. Finally, the BSE Sensex fell 465.01 points or 0.95% to 48,253.51, while the CNX Nifty was down by 137.65 points or 0.94% to 14,496.50.