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Published on 29/05/2020 4:08:29 PM | Source: LKP Securities Ltd

Bulls Make Strong Comeback; Sensex Reclaims 32200 Mark - LKP Securities

Posted in Market Outlook| #Market Outlook #LKP Securities Ltd

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Extending their previous session’s rally, Indian equity benchmarks witnessed remarkable day of trade with frontline gauges garnering a gain of around two percent each on Thursday. Markets started the session on optimistic note with Commerce and industry minister Piyush Goyal’s statement that worst for the economy is over and revival is in the air. Traders took some support with former RBI governor Duvvuri Subbarao said that the country's economy is likely to decline by 5 percent in the current fiscal but may expand by around 5 percent in the next financial year. Traders overlooked SBI Ecowrap report stating that as the coronavirus pandemic and the nationwide lockdown severely impact the economy, India's gross domestic product for the first quarter of the financial year 2020-21 is likely to contract by over 40 per cent. Also, market participants paid no heed to S&P Global Ratings’ statement that the Indian economy will shrink by 5 per cent in the current fiscal as it joined a chorus of international agencies that are forecasting a contraction in growth rate due to coronavirus lockdown halting economic activity.

Markets continued to trade upward to end near intraday high levels. Traders took note of report that India may need to inject up to Rs 1.5 lakh crore rupees ($19.81 billion) into its state-owned lenders as their pile of soured assets is expected to double during the coronavirus pandemic. Separately, a report stated that with 7,260 cases, India has recorded its biggest single-day spike in total number of coronavirus cases to 158,086 - just a shade behind Turkey. Worldometer data also suggests that the country has seen 190 new deaths in the past 24 hours due to the infection. With this, India's death toll has risen to 4,534. Among states, Maharashtra has the highest number of Covid-19 cases, at 56,948.

Firm opening in European counters too boosted domestic sentiments. All the key European markets were trading in green as businesses returning to work and a 750 billion euro EU stimulus plan outweighed rising U.S.-China tensions. Meanwhile, Asian markets ended mixed on concerns surrounding rising Sino-US tensions after US Secretary of State Mike Pompeo warned that Hong Kong no longer warranted special treatment under US law, following Beijing's plan to impose a controversial new security law on Hong Kong.

Back home, Coal stocks remained in focus with report that the Centre is likely to launch the process of auctioning coal blocks for commercial mining on June 11, picking around 50 mines for the hammer. Rubber sector traded with traction on report that India is likely to impose anti-dumping duty on imports of a certain type of rubber used in various industries, as the domestic industry has approached the commerce ministry to investigate the alleged dumping of the product from China, European Union, Japan and Russia.

Finally, the BSE Sensex gained 595.37 points or 1.88% to 32200.59, while the CNX Nifty was up by 175.15 points or 1.88% to 9490.10.

The BSE Sensex touched high and low of 32267.23 and 31641.77, respectively and there were 27 stocks advancing against 3 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.34%, while Small cap index was up by 1.42%.

The gaining sectoral indices on the BSE were Capital Goods up by 5.11%, Auto up by 3.54%, Industrials up by 3.49%, Consumer Discretionary Goods & Services up by 2.92% and Realty was up by 2.60%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Larsen & Toubro up by 6.17%, Hero MotoCorp up by 5.52%, Indusind Bank up by 4.95%, HDFC Bank up by 4.56% and Maruti Suzuki up by 4.37%. On the flip side, ITC down by 0.83%, SBI down by 0.19% and Bharti Airtel down by 0.05% were the only losers.

Meanwhile, lowering its growth forecast, global rating agency S&P Global Ratings in its latest report has said that Indian economy is expected to contract 5 per cent in the current fiscal year (FY21) as the lockdown imposed to contain COVID-19 pandemic has curtailed economic activity severely. 

As per the report, the COVID-19 outbreak in India and two months of lockdown -- longer in some areas -- have led to a sudden stop in the economy. That means growth will contract sharply this fiscal year. Economic activity will face ongoing disruption over the next year as the country transitions to a post-COVID-19 world.

S&P Global Ratings further noted that the government's stimulus package, with a headline amount of 10 per cent of GDP, has about 1.2 per cent of direct stimulus measures, which is low relative to countries with similar economic impacts from the pandemic. The remaining 8.8 per cent of the package includes liquidity support measures and credit guarantees that will not directly support growth.

The CNX Nifty traded in a range of 9,511.25 and 9,336.50 and there were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 9.58%, Eicher Motors up by 7.34%, Larsen & Toubro up by 5.78%, Hero MotoCorp up by 5.18% and HDFC Bank up by 4.15%. On the flip side, Wipro down by 0.92%, ITC down by 0.60%, Cipla down by 0.52%, SBI down by 0.44% and JSW Steel down by 0.43% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 41.05 points or 0.67% to 6,185.30, France’s CAC gained 39.12 points or 0.83% to 4,727.86 and Germany’s DAX was up by 53.08 points or 0.46% to 11,710.77.

Asian markets ended mixed on Thursday on concerns surrounding rising Sino-US tensions after US Secretary of State Mike Pompeo warned that Hong Kong no longer warranted special treatment under US law, following Beijing's plan to impose a controversial new security law on Hong Kong. The declaration could have major implications for Hong Kong's status as a global financial and trading hub and is likely to anger Beijing. Meanwhile, Japanese shares ended higher on optimism over economic recovery from the corona virus pandemic. Japan's Cabinet approved a 31.91 trillion yen ($296 billion) second supplementary budget for the fiscal year through next March to reduce the social and economic impacts of the corona virus pandemic.
 

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