In a highly volatile day, Indian equity benchmarks ended higher for second day in row on Monday, on the back of a broad-based buying interest led by gains in banking, financial services, Oil & Gas and Metal shares. Positive global cues also boosted investor sentiment. Markets made an optimistic start and stayed in green for whole day, as traders got respite with Finance Minister Nirmala Sitharaman's statement that the government has taken a host of initiatives, including a stimulus package totalling 10 percent of the country's GDP and major reforms in the labour sector, to contain the spread of coronavirus disease (covid-19) pandemic and also to mitigate its social and economic impact. Some support also came with ICRA Ratings' report that farm sentiments have remained buoyant mainly driven by healthy monsoon and further optimism of a good kharif crop. It also said agriculture income is likely to benefit over the medium term aided by increased government focus on rural income coupled with the recently introduced farm reforms. However, in afternoon deals, key gauges erased most of their initial gains, as traders got anxious with report that after six months of severe stress triggered by the toughest lockdown so far, some high-frequency indicators point towards economic recovery but there are signs that this revival is fragile. It estimated that the economy is likely to contract by 13.5 per cent in the second quarter (July-September), and the contraction in FY21 (April 2020 to March 2021) is likely to be around 9.5 per cent unless the government takes immediate initiative to revive the economy. But, markets regained upward momentum in late afternoon deals and settled with decent gains, as optimism remained among traders with the government stating that central public sector enterprises have cleared payments to the tune of Rs 13,400 crore owed to micro, small and medium enterprises in the last five months and Rs 3,700 crore was paid to the units in September alone. The micro, small and medium enterprises (MSME) Ministry this month has written to the top management of over 2,800 corporates by name to make payment of pending dues of MSMEs. Finally, the BSE Sensex surged 448.62 points or 1.12% to 40,431.60, while the CNX Nifty was up by 110.60 points or 0.94% to 11,873.05.

The US markets ended lower on Monday as investors worried about the prospects of a stimulus package being completed ahead of the November 3 election. The weakness that emerged on markets reflected concerns about whether lawmakers in Washington will reach an agreement on a new stimulus bill. House Speaker Nancy Pelosi's deputy chief of staff Drew Hammill revealed that the Democratic leader spoke with Treasury Secretary Steven Mnuchin. Hammill said while there was some encouraging news on testing, there remains work to do to ensure there is a comprehensive testing plan that includes contact tracing and additional measures to address the virus' disproportionate impact on communities of color. Hammill said that there remains an array of additional differences that must be addressed in a comprehensive manner in the next 48 hours. On the economic data front, Homebuilder confidence in the U.S. climbed to another new record high in the month of October, according to a report released by the National Association of Home Builders (NAHB). The report said the NAHB/Wells Fargo Housing Market Index rose to 85 in October from 83 in September. Street had expected the index to come in unchanged. NAHB Chairman Chuck Fowke said traffic remains high and record-low interest rates are keeping demand strong as the concept of 'home' has taken on renewed importance for work, study and other purposes in the Covid era. However, He added it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber and other key building materials are lengthening construction times.

Crude oil futures ended lower on Monday, weighed down by lingering concerns about energy demand outlook due to rising coronavirus cases. Several states in America have reportedly seen an increase in the number of new Covid-19 cases. Italy announced new measures after the country recorded a record daily increase of the Covid-19 cases for the fifth day in a row on October 18. Further, increased oil output from Libya hurt as well. After remaining shut for a few months, Libya has increased its crude output following easing of a blockade by eastern forces in September. Crude oil futures for November fell 5 cents or about 0.1 percent to settle at $40.83 a barrel on the New York Mercantile Exchange. December Brent crude declined 31 cents or 0.7 percent to settle at $42.62 a barrel on London's Intercontinental Exchange.

Indian rupee ended marginally weaker against the US dollar on Monday, on increased demand for the greenback from importers and banks. Traders were concerned as Securities and Exchange Board of India (SEBI) in its latest data has showed that investments through participatory notes (P-notes) in the Indian capital market dropped to Rs 69,821 crore at September-end. This marks the first decline in investment through the route since March. However, downfall remain capped with Finance Minister Nirmala Sitharaman's statement that the government has taken a host of initiatives, including a stimulus package totalling 10 percent of the country's GDP and major reforms in the labour sector, to contain the spread of coronavirus disease (covid-19) pandemic and also to mitigate its social and economic impact. On the global front, pound held above a 10-day low on Monday as investors cut their holdings with British and European negotiators scrambling to salvage post-Brexit trade talks. Finally, the rupee ended at 73.37, 2 paise weaker from its previous close of 73.35 on Friday.

The FIIs as per Monday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 4914.87 crore against gross selling of Rs 4923.41 crore, while in the debt segment, the gross purchase was of Rs 2653.27 crore with gross sales of Rs 1451.44 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.92 crore against gross selling of Rs 13.01 crore.

The US markets settled lower on Monday as the deadline for US lawmakers to pass an economic stimulus bill approached. Asian markets are trading in red on Tuesday as investors await the October fixing of China's benchmark lending rate. Indian markets ended over a percent higher on Monday, boosted mainly by bank and FMCG stock. Today, the markets are likely to get negative start following sell-off in the global peers. There will be some cautiousness with Finance Minister Nirmala Sitharaman's statement that the government has begun an exercise to assess the impact of the pandemic on the economy and likely contraction in GDP, even as she did not rule out the possibility of another stimulus to boost growth. Though, some respite may come later in the day with a private report that COVID-19 vaccines will be the fastest vaccine to be ever developed and they will be available by the summer of 2021. Some support will come with data released by the Ministry of Statistics and Programme Implementation (MoSPI) in the quarterly bulletin of the Periodic Labour Force Survey (PLFS) showing that unemployment in urban areas fell to 8.4% in July- September 2019 from 8.9% in the June quarter last year. Market participants may take encouragement with report that India on Monday witnessed a significant drop in the number of new Covid-19 cases. According to Worldometer, at 46,498, the country registered fewer daily infections than the US -- for the first time in over a month -- taking its tally to 7,594,736. Traders may take note of report that Finance Minister Nirmala Sitharaman exhorted large central public sector enterprises (CPSEs) to achieve by December 75 per cent of their planned capital expenditure (capex) target for 2020-21, to support economic growth hit by the COVID-19 crisis. There will be some reaction in sugar industry stocks with ISMA's statement that India needs to export 6 million tonnes (MT) of sugar in 2020/21 marketing year started on October 1 as the production is set to jump on higher area. Meanwhile, the Rs 518-crore Equitas Small Finance Bank initial public offer (IPO) will open for subscription on today, October 20, 2020. The company has fixed a price band of Rs 32-33 per share and the issue will close for subscription on October 22. There will be lots of important earnings announcements too, to keep the markets in action.

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

Nifty Top volumes

• Dr. Reddy's Laboratories and RDIF have received approval from the DCGI to conduct an adaptive phase 2/3 human clinical trial for Sputnik V vaccine in India. 
• HDFC Bank has entered into partnership with Amazon for the Great Indian Festival sale. 
• Reliance Industries' telecom arm -- Jio is planning to launch a 5G smartphone for less than Rs 5,000. 
• Maruti Suzuki India has launched the Swift Limited Edition which will excite customers who aspire for a more stylish, bold and dynamic vehicle.