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Published on 20/05/2020 5:09:25 PM | Source: LKP Securities Ltd

Markets Continue To Trade In Green Territory - LKP Securities

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

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Indian equity markets continued to trade in green territory in the late afternoon session, despite negative cues from European markets. The broader indices, BSE Mid cap, Small cap index were also trading with the gains of around half a percent each. Some support came 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. Traders ignored Crisil research wing’s report stating that eight states most affected by the COVID-19 pandemic account for over 60 per cent of the Gross Domestic Product (GDP) and the extended restrictions will slam the economy harder. The eight states, which include Maharashtra, Gujarat and Tamil Nadu, among others also account for 58 per cent of the employment. The share of gross state value added (GSVA) from these states is 64 per cent in agriculture, 63 per cent in industry and 53 per cent in services. Sector wise, steel sector remained in focus, as ratings agency ICRA in its latest report has said that demand for steel in India is likely to decline by upwards of 20 percent in ongoing financial year (FY21), which will be the sharpest fall on record. Consequently, it has revised its outlook for the sector to negative from stable as the domestic steel demand is expected to remain subdued until the COVID-19 pandemic is brought under control.

On the global front, European markets were trading lower after experts began to question the reliability of data from potentially promising trials of a coronavirus vaccine.

The BSE Sensex is currently trading at 30372.75, up by 176.58 points or 0.58% after trading in a range of 30157.75 and 30596.17. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.54%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.97%, Oil & Gas up by 1.79%, Consumer Durables up by 1.37%, Energy up by 1.25% and Realty was up by 1.19%, while Telecom down by 2.40% and TECK was down by 0.39% were the only losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 4.00%, Larsen & Toubro up by 3.48%, Tata Steel up by 2.24%, ITC up by 1.73% and Ultratech Cement up by 1.72%. On the flip side, Indusind Bank down by 4.43%, Hero MotoCorp down by 3.20%, Bharti Airtel down by 1.58%, Infosys down by 0.60% and ICICI Bank down by 0.52% were the top losers.

Meanwhile, few days after announcement of stimulus package, credit rating agency India Ratings and Research (Ind-Ra) in its latest report has expressed a need for speedy implementation of the recent measures announced by the government for NBFCs to provide maximum benefit to micro, small and medium enterprises (MSMEs).

According to the report, the Rs 30,000 crore special liquidity scheme, which is fully guaranteed by the government, can incentivise banks to take exposure in the lower rated investment grade non-banking financial companies (NBFCs). Moreover, banks would be able to have slightly better pricing on these loans, notwithstanding them being proposed to be backed by a government guarantee, on account of the lower bargaining power of the lower rated NBFCs.

Ind-Ra also noted that Rs 45,000 crore partial credit guarantee scheme with 20 per cent first loss protection from the government is aimed at providing some incentive to lenders. This could provide some liquidity window to small NBFCs, provided lenders have the risk appetite to fund these entities after getting 20 per cent loss cushion.

The CNX Nifty is currently trading at 8933.05, up by 53.95 points or 0.61% after trading in a range of 8875.35 and 9000.05. There were 38 stocks advancing against 12 stocks declining on the index.The top gainers on Nifty were Mahindra & Mahindra up by 4.19%, BPCL up by 4.06%, GAIL India up by 3.97%, UPL up by 3.83% and Grasim Industries up by 3.70%. On the flip side, Bharti Infratel down by 9.87%, Indusind Bank down by 4.21%, Hero MotoCorp down by 3.18%, Vedanta down by 1.61% and Bharti Airtel down by 1.60% were the top losers.

European markets were trading lower, UK’s FTSE 100 decreased 33.12 points or 0.55% to 5,969.11, France’s CAC decreased 42.68 points or 0.96% to 4,415.48 and Germany’s DAX was down by 74.95 points or 0.68% to 11,000.34.

 

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