Markets to get positive start; Services PMI data eyed

Indian markets ended higher on Wednesday led by gains in metals, media and auto stocks amid positive momentum in global markets. Today, the markets are likely to get positive start amid optimistic cues from global peers. Traders will be eyeing Finance Minister Nirmala Sitharaman review meeting with heads of banks and NBFCs on September 3 for smooth and speedy implementation of the one-time debt recast for resolution of COVID-19 related stress in bank loans. Investors are also looking ahead to the Services PMI data for August which is scheduled to be released later in the day. Some support will come with report that India has moved four places on the Global Innovation Index (GII) 2020 to rank at 48 since 2019. This makes it the third-most innovative lower middle-income economy in the world, according to the report. India at the 48th place also retains the highest rank in the central and southern Asia region. Though, rising coronavirus cases in the country likely to dampen sentiments in the markets. India has recorded its highest-ever single-day spike of nearly 83,000 in new coronavirus cases. The total now stands at 3,848,968. There may be some cautiousness with Federation of Indian Export Organisations’ (FIEO) statement that the government's decision to cap export incentives under MEIS scheme at Rs 2 crore per exporter on outbound shipments made during September-December, 2020 is going to seriously affect traders. Meanwhile, India may impose anti-dumping duty on a certain type of fibre imported from European Union, Belarus, Ukraine and Peru as the commerce ministry's arm DGTR has recommended for the same after conducting a probe. Aviation stocks will be in focus with report that in further easing of restrictions, the government permitted Indian airlines to increase the number of domestic passenger flights to 60 per cent of their pre-COVID services. There will be some reaction in power stocks with rating agency ICRA’s report that demand for electricity in the country improved to about 98 per cent of pre-COVID-19 level in August, led by recovery in rural areas.

The US markets ended in green on Wednesday after data showed US private payrolls expanded last month, but at the much slower pace than expected. Asian markets are trading mostly higher on Thursday following overnight positive cues from Wall Street.

Back home, Indian equity benchmarks, swinging between gains and losses throughout the day, managed to close Wednesday’s session with decent gains for the second day in a row, tracking gains in M&M, Power Grid and Tata Steel amid a largely positive trend in global markets. After opening on a muted note, markets were trading marginally higher as traders took some support with CII-IBA survey report stating that the financial conditions are looking up in the current quarter (Q2FY21) due to policy decisions and steps the government and Reserve Bank of India have taken to support economy. But, Indian benchmarks erased those gains to turn highly volatile in morning deals, with the Finance Ministry’s statement that the gross GST collection in August stood at Rs 86,449 crore, down from Rs 87,422 crore collected in July. Trading sentiments remained in lackluster mood in afternoon session, as Moody's Investors Service said India will be among the large emerging market sovereigns to have highest debt burden by 2021. Also, rising coronavirus cases is likely to dampen the sentiments in the markets. Though, markets reversed trend in late afternoon deals and ended on a bullish note, taking support from Union Minister of Commerce and Industry Piyush Goyal’s statement that the whole package of the US-India trade deal is almost ready and it can be finalised when the local political situation in the United States is conducive. Traders also took note of the Directorate Generate of Foreign Trade (DGFT) latest notification has said that a limit has been imposed on total rewards under the Merchandise Exports from India Scheme (MEIS). The total reward which may be granted to an IEC (Import Export Code) holder under the scheme shall not exceed Rs 2 crore per IEC of exports made in the period September 1, 2020 to December 31, 2020. Finally, the BSE Sensex gained 185.23 points or 0.48% to 39,086.03, while the CNX Nifty was up by 64.75 points or 0.56% to 11,535.00.