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Domestic indices likely to make negative opening on Tuesday
Aug-03-2021

Indian markets ended higher on Monday led by gains in auto, IT and realty stocks amid positive global cues. Today, domestic indices are staring at a negative opening following weakness in global peers. There will be some cautiousness as a periodic labour force survey by the National Statistical Office (NSO) showed that unemployment rate rose to 13.3 per cent in July-September 2020 as compared to 8.4 per cent in the year-ago period. Joblessness or unemployment rate (UR) is defined as the percentage of unemployed persons in the labour force. The UR was 20.9 per cent in April-June 2020, the eighth Periodic Labour Force Survey (PLFS) showed. However, some respite may come as preliminary data released by the commerce and industry ministry showed merchandise exports grew 48 per cent YoY in July to $35.17 billion on account of a rise in global orders in shipments of petroleum products, engineering products, gems and jewellery segments. On a sequential basis, outbound shipments witnessed an 8 per cent jump and grew over 34 per cent as compared to July 2019. Also, a private report stated that Bharat Biotech's Covaxin is effective against the Delta and Delta plus variants. Weekly indicators of economic activity in India are showing signs of improvement as new Covid-19 cases increase. Metal stocks will be in focus as the country's steel output took a hit during the April-June period of 2021 due to the emergence of the second wave of Covid-19 pandemic. Union Steel Minister Ram Chandra Prasad Singh said during the second wave of pandemic, the public and private sector steel plants together supplied 2,30,262 tonnes of liquid medical oxygen (LMO) between April 1 to July 25, 2021. There will be lots of important earnings announcements too, to keep the markets in action. Meanwhile, riding on huge investor interest in the healthcare sector, five pharma companies are tapping the initial public offering (IPO) market over the next couple of weeks to raise over Rs 8,000 crore. The list includes the Rs 4,000-crore IPO by the Bain Capital-backed Emcure Pharma, the Rs 1,500-crore issue by Vijaya Diagnostic Centre, diagnostic firms Krsnaa Diagnostics (Rs 1,200 crore) and Supriya Lifesciences (Rs 1,200 crore), and Windlass Biotech’s Rs 400 crore issue.

The US markets ended mostly lower on Monday on concerns about the Delta variant of the coronavirus. Asian markets are trading mostly in red on Tuesday ahead of the Reserve Bank of Australia’s latest interest rate decision.

Back home, Indian equity benchmarks closed with gains of over half percent on Monday paced by strong buying interest in index heavyweights Titan Company, Mahindra & Mahindra and Reliance Industries. Strong trend in other global markets also added to bullish sentiment. Benchmarks opened a day with good gap and managed to hold bullish stream throughout day, as Goods and Services Tax (GST) mop-up grew 33 percent year-on-year in July to over Rs 1.16 lakh crore, indicating that the economy is recovering at a fast pace. This is the second highest collection so far this fiscal after a record Rs 1.41 lakh crore mop-up in April. Sentiments got the boost as the growth of eight core infrastructure industries grew by 8.9 percent in June 2021 as compared to same month last year, mainly due to a low base effect and uptick in production of natural gas, steel, coal and electricity. Some support also came with commerce Minister Piyush Goyal’s statement that India and the US are 'natural partners' and services trade will play a critical role in ever-expanding business ties. The minister also said that the services sector holds a lot of promise in aiding India's economic recovery in the post Covid period. Markets sentiment remained bullish in the afternoon session after India's manufacturing sector activities witnessed the strongest rate of growth in three months in July amid improved demand conditions and easing of some local COVID-19 restrictions. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) rose from 48.1 in June to 55.3 in July, pointing to the strongest rate of growth in three months. Traders also remained optimistic after India’s unemployment rate fell to a four-month low of 6.95% in July, staging a near-complete recovery in all parameters of the labour markets, which were hit by the second wave of the pandemic. The labour participation rate, unemployment rate and employment rate have all bounced back to close to their March 2021 levels. Meanwhile, data released by the Controller General of Accounts (CGA) showed that the central government's fiscal deficit stood at Rs 2.74 trillion or 18.2 per cent of the full year's Budget estimate at the end of June. The fiscal deficit at the end of June 2020 was 83.2 per cent of the Budget Estimates (BE) of 2020-2 at Rs 6.62 trillion, after a fall in tax receipts due to pandemic lockdown that led to the worst recession in seven decades. Finally, the BSE Sensex rose 363.79 points or 0.69% to 52,950.63, while the CNX Nifty was up by 122.10 points or 0.77% to 15,885.15.
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