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Markets likely to open in green; IIP data eyed
Aug-11-2020

Indian markets ended higher on Monday contributed by the gains in pharma, auto and financial stocks. Today, the start of session is likely to be positive following firm trade in Asian peers. Investors are eyeing the industrial output data for June scheduled to be released later in the day. Traders will be getting encouragement with Commerce and Industry Minister Piyush Goyal’s statement that India's balance of payments this year is going to be very, very strong on the back of significant improvement in exports and a fall in imports. Some support will come in with report that India's recovery rate from Covid-19 improving. India recorded 54,859 recoveries on August 10, the highest till date. Daily new recoveries have grown to the range of 40,000 to 50,000 in a day, much higher than the previous month’s range of 20,000 to 40,000 a day. Besides, Union Minister Nitin Gadkari said the government is working on the idea of a land bank and a social microfinance institution to help people run small shops and businesses. Though, traders may be concerned with private report that on August 10, India reported over 1,000 fatalities for the second time. Daily new deaths have been consistently on the rise. There may be some cautiousness with ratings agency ICRA’s report that the coronavirus pandemic will significantly impact performance of companies and it is likely to be severe and prolonged for select sectors, especially aviation, hospitality and retail. It added the pandemic, followed by extended lockdowns in India both nationally and then localised, has impacted India Inc for the major part of the first quarter of the current financial year. Meanwhile, the commerce ministry's investigation arm DGTR has recommended imposition of provisional anti-dumping duty on PET resin chemical from China to guard domestic players from cheap imports. Auto stocks will be in focus with data from The Federation of Automobile Dealers Associations (FADA) showing that total auto vehicle registrations dropped by 36.27 per cent to 1,142,633 units from 1,792,879 units, a year ago. There may be some reaction in defence stocks with Defence Minister Rajnath Singh’s statement that the government will unveil more steps to attract investment in defence manufacturing so that India can produce world-class military platforms and weapons systems. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended mostly higher on Monday as investors extended a rotation into value stocks from heavyweight tech-related names while awaiting news on progress in a US fiscal support bill. Asian markets are trading in green on Tuesday as New York, California and Texas reported a drop in coronavirus hospitalizations and investors assessed the progress in US stimulus talks between Democrats and Republicans.

Back home, Indian equity benchmarks slipped from day's high but still ended in the positive territory on Monday on the back of positive global cues, encouraging quarterly numbers by select pharma companies. Markets started this week’s trading with gains of around a percent each, as traders took encouragement with Niti Aayog CEO Amitabh Kant’s statement that India's FDI regime is the most liberal in the world, and even during the COVID-19 pandemic, the country has attracted over $22 billion worth of direct investments. Sentiments also got boost after Prime Minister Narendra Modi launched financing facility of Rs 1 lakh crore under the Agri-Infra Fund that will help create post-harvest infrastructure in villages and generate jobs. Adding the optimism among investors, Union minister Nitin Gadkari has urged the industry to identify the sectors heavily reliant on imports, particularly from China, and look for substitutes towards indigenous production to make India a super power. Domestic markets maintained their upward momentum in the afternoon session, with Commerce and Industry Minister Piyush Goyal’s statement that the world is looking for trusted partners where there is rule of law, transparency in systems, strong judiciary and democratic traditions, and India can become a key player in global supply chains as it provides all of these. He said India has to engage with the world with competitive prices, high-quality products, large scale economies of manufacturing, high productivity levels, but not on the crutches of government subsidies. However, markets trimmed most of their initial gains to come off day’s high in late afternoon session, despite Crisil Ratings’ report stated that one-time restructuring of corporate loans, which are facing stress due to coronavirus-induced disruptions, announced by the Reserve Bank of India (RBI) is likely to ease liquidity pressure for companies. Finally, the BSE Sensex gained 141.51 points or 0.37% to 38,182.08, while the CNX Nifty was up by 56.10 points or 0.50% to 11,270.15.
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