Published on 13/07/2020 5:34:13 PM | Source: LKP Securities Ltd

Markets manage to end with gains amid volatility - LKP Securities

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

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Markets manage to end with gains amid volatility

In a highly volatile session, Indian stock markets climbed off the day's high but ended with decent gains on Monday, tracking positive Asian shares. Both the topline indices had opened nearly one percent higher and progressed further during the early morning trade, as traders took encouragement with RBI Governor Shaktikanta Das’ statement that the Indian economy has started showing signs of normalcy with ease in lockdown restrictions across the country. He added that post containment of COVID-19, a very careful trajectory has to be followed in orderly unwinding of countercyclical regulatory measures. Traders took note of the International Monetary Fund’s (IMF) statement that given the severity of the country's economic situation due to the COVID-19 pandemic, there is a scope for more near term fiscal support in India, especially for vulnerable households and SMEs.

However, in the afternoon session of trade, the indices pared their gains and briefly turned negative, as traders got anxious with Industry body FICCI’s Survey in which it has projected India’s annual median GDP growth for FY21 at (-) 4.5 percent. It said with the rapid spread of COVID-19 pandemic manifesting into an economic and healthcare crisis globally, the latest forecast marks a sharp downward revision from the growth estimate of 5.5 per cent reported in the January 2020 survey. Some pessimism also came as the finance ministry has written to the states on additional borrowing of 2 per cent of their projected GSDP in the current financial year, amid stress in revenue due to coronavirus-induced lockdown. But, key gauges picked up some steam and ended with gains, as some optimism remained among traders with agriculture ministry’s statement that the government is on track to achieving the target of doubling farmers' income by 2024 and recent farm reforms, including setting up of a Rs 1 trillion agri-infra fund, are steps in that direction.

On the global front, Asian markets ended mostly higher on Monday following the positive cues from Wall Street as upbeat coronavirus treatment and vaccine news helped offset worries about the surge in new coronavirus cases worldwide. Gilead Sciences said that based on new data, its drug remdesivir showed a reduction in the risk of death in coronavirus patients. European markets too were trading higher, as investors looked ahead to the upcoming earnings season for signs of an economic recovery from the coronavirus-induced downturn. Investors also remain hopeful that the EU 27 will make progress in agreeing a 750 billion euro ($848.78 billion) Covid-19 recovery fund. Back home, telecom stocks were buzzing as telecom regulator TRAI notified certain changes to the telecom interconnection rules, paving the way for easier interconnectivity between any two fixed-line networks and between fixed-line and national long distance networks. Auto component sector stocks also were in focus with ratings agency ICRA’s statement that weak demand across domestic original equipment manufacturers, replacement market and exports could lead to a decline of 14-18 percent in revenues of auto component sector in 2020-21.

Finally, the BSE Sensex rose 99.36 points or 0.27% to 36,693.69, while the CNX Nifty was up by 34.65 points or 0.32% to 10802.70.  

The BSE Sensex touched high and low of 37,024.20 and 36,533.96, respectively and there were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose 0.05%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were Energy up by 2.47%, Telecom up by 1.93%, TECK up by 1.61%, IT up by 1.52% and Metal up by 1.37%, while Realty down by 1.52%, Finance down by 1.49%, Bankex down by 1.39%, Utilities down by 0.76%, Power down by 0.59% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 5.53%, HCL Technologies up by 3.48%, Reliance Industries up by 2.97%, Bharti Airtel up by 2.10% and Infosys up by 1.91%. On the flip side, Bajaj Finance down by 2.41%, HDFC Bank down by 2.26%, HDFC down by 2.11%, Power Grid down by 2.00% and ICICI Bank down by 1.89% were the top losers.

Meanwhile, Commerce and Industry Minister Piyush Goyal has said that the government is looking at reforms in various sectors like mining, banking and capital market to promote economic activities in the country. He said the government is also looking to open up foreign direct investment (FDI) in certain sectors where there still are some constraints, foreign investment will be permitted. He said the government is also looking at simplifying domestic approvals and bureaucratic processes to make it easier for industry to do business. He added that the government will soon announce a new industrial policy, with a new forest policy and several other initiatives to promote economic activities in a variety of ways.

Talking about economic revival, the minister said a number of indicators are showing that economic activity has ramped up over the last 30-40 days. He said ‘power consumption is back to 90 per cent, GST tax collection has improved, so, I believe that we will be able to recoup very quickly’. He also said ‘to my mind, we will be able to bring back the economy over the next 3-4 months to last year level and then get rapid growth in the economy.’

Talking about investments in railways, Goyal said both global and Indian companies bid for projects and the electrification of Indian railways. He noted that the 20 GW clean energy programme is going to be bid out and any company from around the world can come in and invest in PPP mode, own the projects and supply the power to railways. He also stated that going forward the Indian railways is opening up new opportunities. He added that it is now open up for bidding 150 routes for private trains.

The CNX Nifty traded in a range of 10,894.05 and 10,756.05 and there were 33 stocks advancing against 16 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Tech Mahindra up by 5.54%, Hindalco up by 3.79%, HCL Technologies up by 3.74%, JSW Steel up by 3.26% and Reliance Industries up by 3.23%. On the flip side, Power Grid down by 2.20%, Bajaj Finance down by 2.10%, HDFC Bank down by 1.95%, HDFC down by 1.72% and ICICI Bank down by 1.72% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 58.21 points or 0.95% to 6,153.62, France’s CAC rose 39.61 points or 0.8% to 5,010.09 and Germany’s DAX was up by 106.93 points or 0.85% to 12,740.64.

Asian markets ended mostly higher on Monday on hopes for a quick economic recovery despite worries about a continued surge in new corona virus cases worldwide. Further, investors optimism over a corona virus treatment after US Drugmaker Gilead Sciences (GILD) said its drug remdesivir showed a sharp mortality risk drop when used to treat corona virus patients, too added support to markets' sentiment. Chinese shares extended gains on hopes of earnings improvement, despite comments by US President Donald Trump that the relationship between Washington and Beijing has been ‘severely damaged’ by the corona virus pandemic.


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