Indian markets ended higher with gains of over half a percent each on Tuesday amid positive global cues on hopes of a vaccine for Covid-19. Today, markets to make optimistic start following positive cues from Asian peers. Some support will come with report that the government has decided to further revise the criteria for medium units by enhancing the investment and turnover limits to up to Rs 50 crore and Rs 200 crore respectively. Though, rising coronavirus cases may impact markets. India has witnessed its biggest daily spike in the total number of coronavirus cases, with over 6,000 being reported in 24 hours, according to data compiled by Worldometer. There are 106,468 cases of Covid-19 in the country at present, and as many as 3,301 people have died from the disease. Traders may be concerned as rating agency CRISIL joined analysts sceptical about the near-term benefits of the Rs 20 lakh crore stimulus package on growth and also flagged the absence of any dedicated steps for the most troubled sectors. There may be some cautiousness with the Centre for Monitoring of Indian Economy’s (CMIE) report that unemployment rate in India continued to be high at 24% for the week ended May 17, same as week before. Traders may react to the Federation of Indian Export Organisations’ (FIEO) statement that the export from the country is expected to fall by 20 per cent in the current fiscal in the wake of the coronavirus pandemic. Meanwhile, Markets regulator Sebi has allowed mutual funds to make additional investment in government securities and treasury bills while deciding on investment avenues for their corporate bond, banking, PSU and credit risk funds. Metal stocks will be in focus as ratings agency ICRA revised its outlook for the sector to negative from stable, expecting a record fall of 20 percent in domestic steel demand during the ongoing financial year. There will be some reaction in cement stocks with CRISIL Research’s report that even as the Centre announced an economic stimulus package to aid businesses struggling amid the nationwide lockdown, cement dealers in the country expect demand to fall by up to 30 percent in FY21.
The US markets ended lower on Tuesday as investors focused on a report questioning Moderna’s recent coronavirus vaccine early-stage trial results. Asian markets are trading mostly in green on Wednesday as investors await the release of China’s benchmark lending rate.
Back home, Indian equity benchmarks gave up most of their gains in last leg of trade to come off their intraday high points but still managed to end with decent gains, tracking positive global cues amid optimism about a potential vaccine for the coronavirus. Key indices began the session with a gap-up open, as traders took encouragement with Minister for MSMEs and road transport and highways Nitin Gadkari’s statement that the recent steps announced by the government to boost liquidity and credit flows would also bolster the purchasing power of the people via employment creation and help accelerate the wheels of the economy. Traders took note of Expenditure secretary TV Somanathan’s statement that this is a challenging year for the central government due to the serious revenue impact of the coronavirus crisis, but added that the Centre had no plan of carrying out poorly calibrated expenditure cuts. Both indices gave up more than of intraday gains in late trade, as traders got wary with a private report stating that American brokerage Goldman Sachs expects the Indian economy to contract by 5 per cent in FY21, making it the worst performance by the country ever. The brokerage said the GDP will contract by a mind-boggling 45 per cent in the June quarter as compared to the January-March period on an annualised basis, because of the continuing lockdown which is chilling economic activity, before recovering later. Some concern also came as the rating agency Moody's Investors Service in its latest report stated that the measures announced for financial institutions as part of Rs 20 lakh crore-economic package will help ease their asset risk, but will not fully offset the negative impact from the COVID-19 outbreak. Finally, the BSE Sensex gained 167.19 points or 0.56% to 30,196.17, while the CNX Nifty was up by 55.85 points or 0.63% to 8,879.10.
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