Indian equity benchmarks rose for fourth session in a row on Monday and settled at their record closing highs, led by gains in realty, metal and consumer durables stocks amid positive global cues. The benchmarks staged a gap up opening, as India Ratings revised its projections for economic contraction to 7.8 per cent for 2020-21 from the earlier expectation of 11.8 per cent due to easing Covid-19 headwinds and better than expected numbers in the second quarter of the current financial year. Traders remained optimistic with an article on the state of economy in the RBI Bulletin stated that the economy is coming out of the COVID-19 pandemic's deep abyss faster than most of the predictions, and the growth will enter positive zone in the third quarter of the current financial year. Key gauges maintained their up move in the second half of trading session, taking support from Union Commerce and Industry Minister Piyush Goyal's statement that the focus on Vocal for Local and manufacturing of value-added products in India can create job opportunities for the youth and boost the country's economic growth. He noted that as consumers emphasize more on quality products and services at the right price manufactured in the country, it will create more jobs for the youth and help in accelerating the growth of the country's economy. Additional support also came with the Centre for Economics and Business Research's (CEBR) report that India, which appears to have been pushed back to being the world's sixth biggest economy in 2020, will again overtake the UK to become the fifth largest in 2025 and race to the third spot by 2030. Finally, the BSE Sensex rose 380.21 points or 0.81% to 47,353.75, while the CNX Nifty was up by 123.95 points or 0.90% to 13,873.20.

The US markets ended higher on Monday in reaction to news that President Donald Trump has finally signed a $2.3 trillion government spending bill that includes approximately $900 billion in coronavirus relief funds. Trump had previously resisted signing the legislation, calling for $600 in direct payments to individuals to be increased to $2,000. However, trading activity remained subdued with many traders still away from their desks ahead of the New Year's Day holiday on Friday. Meanwhile, airline and commercial real estate stocks also saw some strength on the day, while natural gas, housing and biotechnology stocks moved to the downside. On the economic data front, a report released by the University of Michigan showed US consumer sentiment improved by less than initially estimated in the month of December. The report said the consumer sentiment index for December was downwardly revised to 80.7 from the previously reported 81.4. While street had expected a more modest downward revision to 81.3, the index remains well above the final November reading of 76.9.  

Crude oil futures ended lower on Monday as rising coronavirus cases and tighter restrictions on travel in several places raised concerns about outlook for energy demand. Meanwhile, traders were also looking ahead to the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies. The group is expected to discuss tapering oil output cuts. As of now, the group is set to boost output by 500,000 barrels per day from January. Crude oil futures for February dropped $0.61 or 1.3 percent to settle at $47.62 a barrel on the New York Mercantile Exchange. February Brent crude fell $0.43 or 0.8 percent to settle at $50.86 a barrel on London's Intercontinental Exchange.

Indian rupee ended higher against dollar on Monday as banks and exporters continued to sell the US currency amid persistent capital inflows. Sentiments were positive with private report that the landmark post-Brexit trade deal between the EU and the UK brightens the prospects of a free trade agreement (FTA) between New Delhi and London. Traders also took support as India Ratings revised its projections for economic contraction to 7.8 per cent for current fiscal (FY21) from the earlier expectation of 11.8 per cent due to easing Covid-19 headwinds and better than expected numbers in the second quarter of the current financial year. On the global front; dollar largely shrugged off President Donald Trump's decision to relent on a threat to block a COVID-19 aid bill in thin trading on Monday with many investors on holiday. Finally, the rupee ended at 73.49, 6 paise stronger from its previous close of 73.55 on Thursday.

The FIIs as per Monday's data were net seller in equity segment and net buyer in debt segment. In equity segment, the gross buying was of Rs 3539.54 crore against gross selling of Rs 4042.83 crore, while in the debt segment, the gross purchase was of Rs 2208.87 crore with gross sales of Rs 772.40 crore. Besides, in the hybrid segment, the gross buying was of Rs 40.34 crore against gross selling of Rs 56.85 crore.

The US markets rallied on Monday, as President Donald Trump's signing of a long-awaited $2.3 trillion pandemic aid bill increased optimism for an economic recovery. Asian markets are trading in green on Tuesday as hopes that a long-awaited US pandemic relief package would be expanded and a Brexit trade deal supported investor risk appetites. Indian markets ended higher on Monday led by gains in banking, metals and realty stocks amid positive global cues. Today, the start of session is likely to be optimistic tracking firm global cues coupled with coronavirus vaccine hopes. Some support will come as Serum Institute of India (SII) CEO Adar Poonawalla said he was hoping for the emergency use approval of AstraZeneca-Oxford University COVID-19 vaccine Covishield by the end of this month or January in the UK and India. FICCI's report stating that India could benefit from the likely shift in global supply chains from China to other economies in the aftermath of the COVID-19 pandemic, likely to boost sentiments in markets. Traders may take note of a Reserve Bank paper stating that maintaining 4 percent inflation is appropriate for India as targeting a lower rate could impart deflationary bias to the monetary policy. The paper, authored by RBI Deputy Governor Michael Debabrata Patra and another official Harendra Kumar Behera, has found a steady decline in trend inflation to 4.1-4.3 percent since 2014. However, there may be some cautiousness with rising coronavirus cases in the country. With 16,072 fresh Covid-19 cases, India's caseload has now reached 10,224,797. The country's death toll has mounted to 148,190. With 1,922,048 cases, Maharashtra has the highest number of coronavirus cases, followed by Karnataka 916,909, Andhra Pradesh 881,273, Tamil Nadu 815,000, and Kerala 743,563. Meanwhile, the Finance Ministry on Monday released the ninth instalment of Rs 6,000 crore to the states to meet GST compensation shortfall, taking the total amount of fund released to Rs 54,000 crore. There will be some reaction in sugar stocks as Crisil Ratings said the Centre's export subsidy for the October-September sugar season 2020-21 (SS21) will help sustain the commodity's exports at almost last year's level.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Coal India's board has accorded its In-Principle approval to venture into Aluminium Value chain and Solar Power Value Chain. 
• UltraTech Cement is considering a proposal to raise funds worth Rs 1,000 crore by issuance of rated, listed, non-convertible, redeemable, unsecured NCDs on private placement basis. 
• Reliance Industries has agreed to buy out IMG Worldwide LLC from their sports management joint venture for Rs 52.08 crore.
• Bajaj Auto is expecting sales of high-end motorcycles to grow faster than other motorcycles and its investment of Rs 650 crore in a new plant near its existing manufacturing facility in Chakan.