Markets likely to get cautious start amid rising coronavirus cases
Indian markets broke a 4-day winning run to close a percent lower on Thursday. Today, the markets are likely to make cautious start amid mixed global cues. Rising coronavirus cases are likely to dampen sentiments in the markets. India reported 1,16,836 new COVID-19 cases on Thursday, the highest in over 200 days, taking India’s caseload to 3,52,25,699, according to data released by the health bulletins of States and Union Territories. There will be some cautiousness as India Ratings and Research said the Omicron variant spread will impact the January-March quarter GDP by 0.40 per cent and shave off 0.10 per cent from the FY22 growth, as many states resort to restrictions to limit infections. It added curbs in various forms such as reducing the capacity of market/market complexes and night/weekend curfews to check human mobility/contact have already started in several states, which are impacting economic activities. Traders will be concerned with report that India is aiming for a fiscal deficit of 6.3 percent to 6.5 percent of gross domestic product for the next financial year, a less ambitious target than previously planned as COVID-19 infections threaten the economic recovery. However, some support may come later in the day as the finance ministry released monthly revenue deficit grant to 17 states totalling Rs 9,871 crore. So far, an amount of Rs 98,710 crore has been released to 17 states as post devolution revenue deficit grant in the current financial year. Traders may take note of report that amid fears that the new coronavirus variant may disrupt normal business activity, industry chamber CII pitched for coordinated actions by the Centre and state governments to minimize the impact of Omicron on the economy. Meanwhile, the commerce and industry ministry is making changes in the foreign direct investment (FDI) policy to facilitate disinvestment of the country’s largest insurer LIC, after taking views from the finance ministry. Banking stocks will be in focus as rating agency Icra said the asset quality of the banking system, especially the restructured book, may face headwinds in the coming days as Covid-19 cases have started rising rapidly once again. There will be some reaction in insurance industry stocks as the regulator Irdai decided to set up two hubs on motor insurance and property insurance and also an advisory committee with the overall objective to promote loss prevention measures in the general insurance industry. Sugar industry stocks will be in limelight as trade body AISTA demanded respective state governments to allow truck movement 24X7 to increase the pace of export with maximum quantities of exportable sugar getting lifted from Maharashtra and Karnataka putting pressure on logistics.
The US markets ended lower on Thursday as technology shares fell but financials lent support a day after the market sold off on a hawkish slant in Federal Reserve minutes. Asian markets are trading mostly in green on Friday despite losses on Wall Street.
Back home, Indian equity benchmarks ended lower on Thursday after having run up for the last four consecutive session, with frontline gauges tumbling below their crucial 59,700 (Sensex) and 17,750 (Nifty) levels on sustained selling by funds and retail investors. The domestic markets witnessed a gap-down opening and extended their losses as rising Coronavirus cases in the country sparked fears of renewed curbs to contain the spread of the virus which may impact the nascent economic growth in the country. The sentiments remained down-beat as ICRA Ratings warned that the third wave of the pandemic is likely to shave 40 bps of the fourth quarter Gross Domestic Product (GDP) growth that may print in at 4.5-5 per cent. It said third wave of the pandemic has seen a massive spike in infections after the more infectious Omicron variant of the coronavirus appeared. Frontline indices continued to trade in red terrain in afternoon deals, as traders remained cautious with report stating that the cost of debt-funds for the states has touched the highest level so far this fiscal with the weighted average cut-off crossing the 7.16 percentage points at the latest auctions, up 11 bps over the past week, reflecting the hardening yields even for the government securities. However, markets managed to cut some losses in late hour of trading session, as traders took some support with rating agency ICRA’s repost that a focussed road map, including timely interventions by the government, is necessary for the country in order to achieve the net zero target by 2070. It calls for timely interventions by the government and large capex/investments in GHG (greenhouse gas) emitting sectors like power, industry and transport. Traders took note that Union Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution and Textiles, Piyush Goyal called for transparency and the highest level of integrity in the stock markets, adding that this will empower households to look at greater incomes through investment besides encourage foreign investors. Finally, the BSE Sensex fell 621.31 points or 1.03% to 59,601.84 and the CNX Nifty was down by 179.35 points or 1.00% to 17,745.90
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