Markets likely to make negative start on Monday

Indian markets snapped 5 sessions' winning run on Friday to end flat as gains in heavyweights like Infosys and TCS helped the market avoid deeper losses. Today, the markets are likely to make negative start amid weakness in global markets. There will be some cautiousness as former World Bank Chief Economist Kaushik Basu said that India’s overall macroeconomic situation is in a recovery mode but the growth is concentrated at the top end, which is a worrying trend. Also, rising coronavirus cases may dent sentiments in the markets. India recorded a spike of 257,063 new Covid-19 cases in the past 24 hours, according to Worldometer. The country also witnessed 388 deaths, taking the death toll to 486,482. Besides, Fitch Ratings said the rising COVID cases may delay recovery in MSME and microfinance lending, and add to asset quality risks of non-banking financial institutions. However, some support may come later in the day as RBI data showed bank credit grew 9.16 per cent to Rs 116.83 lakh crore and deposits rose 10.28 per cent to Rs 162.41 lakh crore for the fortnight ended December 31, 2021. There will be some buzz in the IT stocks as Commerce and Industry Minister Piyush Goyal assured full government support to leaders of India’s top IT companies in pushing the growth of the sector and taking services exports to $1 trillion in a decade. Auto stocks may in focus as according to a new Delhi government mandate, aggregators and delivery services would have to ensure that 10 per cent of all new two-wheelers and five per cent of all new four-wheelers are electric vehicles in the next three months. Further, six airbags have been made mandatory in all cars sold from October 1. Meanwhile, latest data by SIAM showed that passenger vehicle exports from India increased 46 per cent in the first nine months of the current fiscal year. There will be some reaction gold related stocks as data of the commerce ministry showed that India’s gold imports, which has a bearing on the country’s current account deficit (CAD), more than doubled to $38 billion during April-December this fiscal on account of higher demand. The imports stood at $16.78 billion in April-December 2020. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended mostly higher on Friday with a big drag from financial stocks as investors were disappointed by fourth quarter results from big U.S. banks, which cast a shadow over the earnings season kick-off. Asian markets are trading mixed on Monday ahead of US earnings season and a slew of Chinese economic data.

Back home, Indian equity benchmarks ended flat after a volatile session on Friday, halting a five-day winning run amid weak global cues. Benchmark indices started lower and traded in red for most part of the day, as traders got anxious with United Nations’ report that India is forecast to grow at 6.5 per cent in fiscal year 2022, a decline from the 8.4 per cent GDP estimate in previous financial year, and while the country's economic recovery is on a solid path amid rapid vaccination progress, coal shortages and high oil prices could put the brakes on economic activity in the near term. Traders remained cautious with Niti Aayog Vice-Chairman Rajiv Kumar’s statement that the country needs much more 'equitable' growth as inequality could lead to tensions in society. He further said the country's democracy will not permit the kind of K-shaped growth it has seen in the past, where different sections of the population have been growing at different paces. Benchmarks continued their lackluster trade in afternoon session, as the wholesale inflation across the country rose to 13.56 per cent in December. The high rate of inflation in December 2021 is primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, chemicals and chemical products, food products, textile and paper and paper products etc as compared to the corresponding month of the previous year. Some anxiety remained among traders with a domestic rating agency ICRA’s statement that the upcoming budget is unlikely to make any provision for recapitalisation of state-owned lenders, as over Rs 3.36 lakh crore has been spent on the banks in the last six years. However, key indices managed to trim most of their losses in late afternoon deals, as traders took some support with data showing that exports in December 2021 were $37.81 billion, as compared to $27.22 billion in December 2020, exhibiting a positive growth of 38.91 per cent. Traders took note of report that the FSDC sub-committee headed by Reserve Bank Governor Shaktikanta Das has reviewed the economic situation in the backdrop of the COVID-19 pandemic and resolved to keep a close watch on the unfolding developments with a view to ensure financial stability. Finally, the BSE Sensex fell 12.27 points or 0.02% to 61,223.03 and the CNX Nifty was down by 2.05 points or 0.01% to 18,255.75.