Markets likely to continue gaining momentum with positive start

Indian markets made mild gains in a volatile session as gains in IT, pharma and consumer stocks were offset by losses in oil & gas, metal and automobile scrips. Today, benchmarks likely to continue their gaining momentum with flat-to-positive start tracking gains in Asian peers. Traders will be taking encouragement as merchandise exports grew for the eleventh consecutive month to $35.65 billion, up 43 per cent on-year in October, as external demand continued to remain robust. The preliminary data released by the commerce and industry ministry showed growth being driven by higher demand for items, primarily engineering goods, petroleum products, gems and jewellery, as well as organic and inorganic chemicals, among other items. Some support will come as the Reserve Bank of India (RBI) in its 'state of the economy' report stated that the aggregate demand in the economy is improving and overall monetary and credit conditions are conducive for a durable economic recovery to take root, while the quality of the government expenditure has seen an improvement in the second half. Traders may take note of Union Finance Minister Nirmala Sitharaman’s statement that the Centre would release double the monthly amount of tax devolution -- a total of Rs 95,082 crore -- in November to enable the states to step up their capex and spur economic growth close to double digits this fiscal year. Meanwhile, the Reserve Bank of India (RBI) remained net buyer of the US currency in September 2021, after it purchased $791 million on the net basis from the spot market. The monthly RBI bulletin for November 2021 showed in the reporting month, the central bank had bought $9.169 billion and sold $8.378 billion in the spot market. There will be some reaction in aviation industry stocks with a private report stating that with a surge in domestic air passenger traffic, the airfares have risen by 30 per cent to 100 per cent of the pre-pandemic levels amid the festive season. Besides, Tarsons Products IPO sailed through on the first day of sale on Monday. The public issue of the company saw massive interest from retail investors who subscribed their portion of the issue 2.12 times.

The US markets ended lower on Monday as rising Treasury yields dented the appetite for technology stocks. Asian markets are trading in green on Tuesday as U.S. stock futures made early gains, though investors were wary of bearish surprises in a batch of Chinese economic data due out later.

Back home, Indian equity benchmarks ended flat with positive bias on Monday, failing to sustain gains made earlier in the day. The benchmarks staged a gap opening, as sentiments got a boost as Commerce and Industry Minister Piyush Goyal said Indian economy is back in action and it is clear from several indicators such as rising exports and increasing foreign direct investment (FDI) inflows into the country. Some support also came with outgoing chief economic advisor K V Subramanian’s statement that Indian economy is expected to see a double-digit growth in 2021-22 and between 6.5-7 per cent in the next financial year. He said that he does not expect commodity inflation will taper the V-shaped recovery going forward. Sentiments remained positive with Sebi chief Ajay Tyagi’s statement that the decision to implement a shorter settlement system in a phased manner beginning February 2022 will go a long way in protecting investors' interest. However, profit booking at higher levels led to the benchmarks coming off intraday highs. Traders got anxious with data showing that retail inflation based on Consumer Price Index (CPI) inched up to 4.48 per cent in October compared to 4.35 per cent in September, due to an uptick in food prices. Though, it eased compared with 7.61 per cent in October 2020. Besides, the Index of Industrial Production (IIP) indicating industrial growth slipped to 3.1 per cent in September, mainly due to the waning low base effect while mining and manufacturing sectors performed well. Some pessimism also came as WPI inflation in October surged to 12.54% from 10.66% a month ago and 1.31% in October 2020. The high rate of inflation in October 2021 is primarily due to rise in prices of mineral oils, basic metals, food products, crude petroleum & natural gas, chemicals and chemical products etc as compared the corresponding month of the previous year. Finally, the BSE Sensex rose 32.02 points or 0.05% to 60,718.71 and the CNX Nifty was up by 6.70 points or 0.04% to 18,109.45.