Markets to get optimistic start on Tuesday
Indian markets ended notably lower on Monday as mounting coronavirus cases both at home and abroad kept investors on edge. Today, the start of the session is likely to be optimistic tracking firm global cues. The announcement of Unlock 2 - phase of the reopening of the economy might aid the positive sentiment. Investors will be looking ahead to the Prime Minister Narendra Modi's address at 4 PM today in which he is expected to speak on the Unlock 2 - phase as well as the government's decision to ban 59 Chinese mobile apps amid border tensions with China. Traders will be taking encouragement with Union minister Mahendra Nath Pandey’s statement that the government has approved the third phase of skill development scheme, Pradhan Mantri Kaushal Vikas Yojana (PMKVY), with an increased focus on digital technology and industry 4.0. Some support will also come as the Reserve Bank of India (RBI) will be conducting a buy and sell open market operations (OMO) in bonds worth Rs 10,000 crore. Though, traders may be some cautiousness as India recorded over 18,000 Covid-19 cases in the last 24 hours, taking its total count to 567,536. Around 16,900 people have succumbed to the disease. Traders may be concerned with India Ratings and Research’s report that the gross state domestic product (GSDP) of all states is likely to contract up to 14.3 per cent in the current financial year due to the impact of Covid-19-induced lockdown on economic activities. There will be some buzz in the metal stocks as Union Steel Minister Dharmendra Pradhan said that the country has avoided steel imports worth over Rs 20,000 crore following DMISP policy since its launch in 2017. Auto stocks will be in focus with private report that India is drawing up an incentive scheme for the autos sector aimed at doubling exports of vehicles and components in the next five years. There will be some reaction in telecom stocks after the Trai released mobile subscriber data for the month of February.
The US markets ended higher on Monday as the sentiment boost from upbeat US housing data outweighed the threat of rising Covid-19 infections. All the Asian markets are trading in green on Tuesday after data showed China's manufacturing sector grew more than expected in June, a hopeful sign for a global economy still struggling to recover from the sweeping impact of the coronavirus crisis.
Back home, Indian equity benchmarks traded with negative bias throughout the day and settled Monday’s session with losses of over half percent, on the back of sustained selling activities by market-participants. Markets made gap-down opening, as traders remained concern with S&P Global Ratings stating that the Indian economy is in deep trouble with growth expected to contract by 5 percent in this year. It added that difficulties in containing the virus, an anemic policy response, and underlying vulnerabilities, especially across the financial sector, are leading us to expect growth to fall this year before rebounding in 2021. The street remained disappointed with private report stating that extended period of the lockdown and increase in COVID-19 positive cases will have a strong impact on the economic growth, while supply chain disruption is expected to keep food prices at elevated levels. Key gauges continued their weak trade during afternoon deals, as India's foreign exchange reserves retreated from a life-time high to touch $505.566 billion in the week ended June 19, down by $2.078 billion from the previous week. Further, geopolitical tensions like India-China border issue and US-China trade tiff kept participants on edge. However, markets managed to pare most of their losses in late trade, taking support from Commerce and Industry Minister Piyush Goyal’s statement that adoption of technology and the digital economy would play a vital role in transforming business enterprises in the future and achieving the target of $5 trillion economy. Some support also came with the India Meteorological Department’s statement that the Southwest Monsoon has covered the entire country nearly two weeks ahead of its schedule. Finally, the BSE Sensex lost 209.75 points or 0.60% to 34,961.52, while the CNX Nifty was down by 70.60 points or 0.68% to 10,312.40.
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