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Markets likely to make pessimistic start amid concerns over rising COVID-19 cases

Indian markets ended Friday’s volatile session marginally higher amid gains in pharma, IT, metals, auto and FMCG indices. Today, the start of new week is likely to be pessimistic on concerns over economic growth amid continue rising COVID-19 cases in the country and stricter restrictions imposed in various states. Traders will be concerned as India reported 275,306 coronavirus disease (Covid-19) cases on Monday, the highest single-day spike so far since the pandemic broke out, Worldometer showed. With this, India's Covid tally has shot up to 15,057,767 cases.

There will be cautiousness as a private report stated that leading brokerages have downgraded India's GDP growth projections for the current fiscal year to as low as 10 per cent on local lockdowns threatening fragile recovery, with the resurgence of COVID-19 cases posing risks to economic recovery. Also, foreign portfolio investors (FPIs) have pulled out a net Rs 4,615 crore from Indian markets in April so far amid sharp escalation in COVID-19 cases and the consequent restrictions imposed by various states, unnerving overseas investors. However, some support may come later in the day with Chief Economic Adviser K V Subramanian’s statement that the Indian economy is in better shape to address the challenge of the second wave of Covid-19 pandemic compared to last year as vaccines have been developed and vaccination drives are taking place.

Meanwhile, non-banking finance companies (NBFCs) have requested the Reserve Bank to extend the one-time restructuring scheme of MSME advances till March 31, 2022, as these players are unable to revive their businesses. There will be some buzz in power stocks as power ministry data showed power consumption in the country grew nearly 45 per cent in the first half of April to 60.62 billion units (BU) over the corresponding period a year ago, showing robust recovery in industrial and commercial demand of electricity. Pharma stocks will be in focus as Pharmexcil said pharma exports from India witnessed over 18% growth to $24.44 billion during the last financial year against $20.58 billion in FY20. There will be some reaction in aviation stocks as Jet fuel price was cut by 1 per cent, the second reduction in rates this month following softening international crude oil prices.

Auto stocks will be in limelight as SIMA data showed that Passenger vehicle exports from India declined by 39 per cent in the last fiscal as disruptions caused by COVID-19 pandemic put brakes on the overseas shipments. Besides, Macrotech Developers will list its equity shares on exchanges today. The IPO that ran between April 7-9 was subscribed 1.36 times. The issue price has been fixed at Rs 486 per share. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended higher on Friday as investors took strong economic data and bank earnings as signs of momentum in the US pandemic recovery. Asian markets are trading in green on Monday helped by expectations monetary policy will remain accommodative the world over, while COVID-19 vaccine rollouts help ease fears of another dangerous wave of coronavirus infections.

Back home, Indian equity benchmarks managed to end the Friday’s session marginally in green with frontline gauges ending above their crucial 48,800 (Sensex) and 14,600 (Nifty) levels. Markets soon after making a cautious start gained traction as traders took support with government data showing that the country's exports jumped by 60.29 per cent to $34.45 billion in March even as the outbound shipments contracted by 7.26 per cent during the full 2020-21 fiscal to $290.63 billion. Imports too grew by 53.74 per cent to $48.38 billion in March, but dipped by 18 per cent to $389.18 billion during April-March 2020-21. Traders also took note of report that as Reserve Bank of India (RBI) concluded the first security acquisition programme (G-SAP) auction buying of Rs 25,000 crore in government bonds. As part of this, the government is scheduled to buy bonds worth 1 lakh crore from the secondary market in the three months to June 30 (Q1 of the current financial year). However, markets cut most of their gains in late trade as traders opted to book their profit in riskier assets. Key gauges somehow managed to end above water as traders took some relief report that the Reserve Bank of India (RBI) has set up the second Regulatory Review Authority (RRA 2.0) with a view to streamlining regulations and reducing compliance burden of regulated entities. The RRA would be set up for a period of one year from May 1, 2021, unless its tenure is extended by the Reserve Bank. Traders also took support with Union minister Nitin Gadkari’s statement that India tackled the first wave of the pandemic with great resilience and came out with strong growth projections, exuding confidence that the MSME sector will battle the second wave with same conviction and lead India to a growth trajectory. Finally, the BSE Sensex gained 28.35 points or 0.06% to 48,832.03, while the CNX Nifty was up by 36.20 points or 0.25% to 14,617.85.

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