Indian markets ended higher for a second straight session on Wednesday, with rate-sensitive financials, auto and realty stocks leading the surge despite rising coronavirus cases in the country. Today, the markets are likely to make flat-to-negative start amid mixed Asian cues coupled with rising coronavirus cases in India. With over 5,000 cases in a single day, the total coronavirus count in the country has risen to 112,028, according to Worldometer data. Traders will be concerned as domestic rating agency Icra warned of a deep recession as it drastically lowered FY21 growth forecast for India to minus 5 percent, citing the very modest fiscal support, extension of the nationwide lockdown and looming labour shortage. The agency also sharply revised downwards the growth contraction in Q1 to 25 percent as against the previous forecast of 16-20 percent and to minus 2.1 percent in Q2 from 2.1 percent growth previously, which implies a recession. Traders will also react to the Reserve Bank of India’s (RBI) data showing that India's overseas direct investment (ODI) in April dipped 62 per cent to $976.14 million. Some support may come later in the day as the union cabinet cleared Rs 3 lakh crore micro, small and medium enterprise (MSME) funding scheme to mitigate the economic distress being faced by the small businesses in the light of the COVID-19 pandemic. Traders may take note of the RBI’s data showing that bank credit rose 6.52 percent year-on-year to Rs 102.52 lakh crore, while deposits grew 10.64 percent to Rs 138.50 lakh crore in the fortnight ended May 8. There will be some buzz in the aviation stocks with report that India will resume domestic flights in a calibrated manner from May 25 as passengers follow prevention guidelines for coronavirus. Coal stocks will be in focus as the government approved a methodology for commercial mining of coal on revenue sharing basis. There will be some reaction in insurance stocks with report that companies across sectors have been struggling to work out ways to cut costs to counter the impact of coronavirus (COVID-19). Life insurance companies for one are hoping to save on costs by reducing branch presence.
The US markets ended higher on Wednesday amid optimism about an economic recovery as states begin to reopen following the coronavirus-induced lockdowns. Asian markets are trading mixed on Thursday as China’s benchmark lending rate was left unchanged.
Back home, extending gains for the second consecutive session, Indian equity benchmarks ended Wednesday’s session near day’s high point with gains of over two percent, on sustained buying, with Sensex and Nifty closing above their crucial 30,800 and 9,050 levels, respectively. Domestic bourses were trading on a positive note since the beginning, as traders got encouragement 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 took a note of Fitch Ratings’ statement that support measures announced by the government for non-banking finance companies (NBFCs) seek to ease borrower strain and boost funding conditions for NBFIs, but successful implementation will be the key. Domestic indices extended their upside in last hour of trade, tracking gains in Healthcare, Consumer Durables and Oil & Gas stocks despite weak cues from global markets. Traders paid no heed towards 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. Traders even overlooked 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. Finally, the BSE Sensex gained 622.44 points or 2.06% to 30,818.61, while the CNX Nifty was up by 187.45 points or 2.11% to 9,066.55.
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