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Sensex, Nifty likely to get optimistic start on Tuesday
Oct-27-2020

Indian markets ended lower with over a percent cut on Monday with selling witnessed across all sectors led by auto, metals and banks. Today, the start of session is likely to be optimistic despite a weak set of global cues. Traders will be taking encouragement with a report that in what could be a healthy sign of economic recovery, goods and services tax (GST) collections recorded in the month of October are likely to cross Rs 1 lakh crore for the first time this fiscal. Some support will come with British drug maker AstraZeneca Plc stating that the Covid-19 vaccine being developed by the University of Oxford produced an immune response in both elderly and young people and adverse reactions were lower among the elderly. Besides, India on Tuesday reported its lowest single-day spikes in total coronavirus infection tally in over three months. The daily jump of 36,838 in total count was the lowest since July 21 even as the tally soared to 7,945,888. Death toll has mounted to 119,535. Traders may take note of Prime Minister Narendra Modi’s statement that India plans to achieve one nation one gas grid and shift towards a gas-based economy. However, there may be some cautiousness as exporters expressed concerns over rising freight charges and shortage of containers as it would impact the country's outbound shipments, and sought Commerce Ministry's intervention in the matter. There will be some buzz in the agriculture stocks with report that state-owned FCI and state procurement agencies have bought 21 percent more paddy so far in the kharif marketing season of this year at 151.17 lakh tonnes amounting to Rs 28,543 crore. Metal stocks will be in focus as according to the World Steel Association (worldsteel) India's crude steel production fell by 2.9 percent to 8.520 million tonnes (MT) in September 2020. There will be some reaction in auto component sector stocks with a private report that sales of automotive components will be dented this fiscal as demand for automobiles plunges to a decadal low after the Covid-19 pandemic acted as a brake on demand, and lockdowns caused supply-chain disruptions and labour shortages.

The US markets ended sharply lower on Monday as soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimmed the outlook for the US economic recovery. Asian markets were trading in red on Tuesday following an overnight tumble on Wall Street.

Back home, Indian equity benchmarks suffered sharp losses of over a percent on Monday, tracking heavy losses in index majors Bajaj Auto, Mahindra & Mahindra and Reliance Industries amid negative cues from global markets. Markets made slightly negative start as traders remained cautious with RBI Governor Shaktikanta Das’ statement that the risk of a second wave of COVID-19 could put sand in the wheels of the nascent recovery. He also said the decision to cut benchmark repo rate would depend upon the evolving situation with regard to inflation which is currently above the tolerance level of the central bank. Key gauges extended fall in the afternoon session, as anxiety remained among traders with report that as many as 441 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns of over Rs 4.35 lakh crore owing to delays and other reasons. Market participants also took note of report that industry body PHDCCI expects India’s GDP to contract by 7.9 percent in the current financial year and grow by 7.7 percent in 2021-22, assessing that the worst is over and the economy is on the verge of a slow recovery. The chamber, however, stated that unemployment remains a key challenge to be addressed by the government. A sharp depreciation in the rupee against the US dollar also weighed on investor sentiment. Indian rupee settled at 73.84 against the US dollar, registering a fall of 23 paise over its previous close. Meanwhile, the Ministry of Finance has issued operational guidelines for implementation of the interest waiver scheme ahead of the hearing in the matter in the apex court on November 2. Finally, the BSE Sensex fell 540.00 points or 1.33% to 40,145.50, while the CNX Nifty was down by 162.60 points or 1.36% to 11,767.75.
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