Markets likely to get gap-up opening amid rebound in global peers

Indian markets before going for long weekend holiday settled lower on Friday, for the second straight session, as coronavirus cases in the country continued to rise despite a complete lockdown to curb the spread of the disease. Markets remain closed on April 06 on account of Mahavir Jayanti. Today, the start of session is likely to be gap-up following rebound in global markets on hopes of pandemic stabilizing coupled with fall in crude oil prices overnight. Traders will be taking encouragement with report that the Finance Ministry is working on a second relief package for the Indian economy hit hard by the coronavirus outbreak and the 21-day nationwide lockdown imposed to curb the contagion. Some support will also come as to ensure adequate liquidity in the system, especially in the corporate bond market, the Reserve Bank of India (RBI) announced the third targeted long-term repo operation (TLTRO) on April 7 for Rs 25,000 crore. Investors may react to Prime Minister Narendra Modi's suggestion that all ministries must prepare business continuity plans once the lockdown ends. However, the number of confirmed coronavirus (Covid-19) cases reached 4,281-mark on Monday. The death toll has increased to 111, while 318 patients have been discharged or recovered from the highly contagious disease. Traders may be concerned with a private report that India’s services sector growth contracted in March after registering the strongest rise in business activity for over seven years in February, as the covid-19 outbreak dented client demand, particularly in overseas markets. Services Purchasing Managers’ Index (PMI) fell to 49.3 from 57.5 in February. There may be some cautiousness with Fitch Ratings’ statement that it has slashed India's growth forecast for the current fiscal to a 30-year low of 2%, from 5.1% projected earlier, as economic recession gripped global economy following the lockdown due to COVID-19 pandemic. Aviation stocks will be in focus with report that domestic air traffic is expected to drop to 80-90 million passengers in the current fiscal and delivery of more than 200 planes to Indian carriers are likely to be deferred by up to two years. There will be some buzz in the banking stocks with S&P Global Ratings’ report that banks in the country are likely to witness a spike in their non-performing assets ratio by 1.9% and credit cost ratios by 130 basis point in 2020, following the economic slowdown on account of COVID-19 crisis. There will be some reaction in cement stocks with Crisil’s report that cement demand in India is expected to fall sharply by 20-25% in the current fiscal year if the COVID-19 pandemic is not contained by May, and construction activities begin only in the second quarter.

The US markets ended sharply higher on Monday as investors focused on signs that the rapid spread of COVID-19 may be stabilizing in the New York. Asian markets are trading in green on Tuesday on signs of a slowdown in coronavirus-related deaths.

Back home, Indian equity benchmarks continued their southward journey for the second straight trading session and ended near day's low on Friday, as investors were still on the back foot amid the rising cases of the coronavirus pandemic in the country. After making cautious start, key indices fell deeply in red, as traders were concerned with private survey stating that India's manufacturing activity expanded at its slowest pace in four months in March and is likely to get worse as demand and output take a hit from the coronavirus outbreak, putting a severe dent in business optimism. The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, declined to 51.8 in March from February's 54.5, its lowest since November but still above the 50-mark that separates growth from contraction for a 32nd month. Some cautiousness also came as Fitch Solutions stated that India's fiscal deficit in 2020-21 may shoot up to 6.2% of the GDP from 3.5% government estimate as a fallout of the Covid-19 economic stimulus package. Markets continued weak run in late hour of trade, as the Asian Development Bank (ADB) said that India's economic growth is likely to slow down to 4 per cent this fiscal on the back of the current global health emergency. Adding some pessimism, the Ministry of Finance in its latest data has showed that Goods and Services Tax (GST) collections in March 2020 slipped below the psychological Rs 1 lakh crore-mark for the first time in four months to Rs 97,597 crore as COVID-19 lockdown that shut most businesses compounded tax collection woes in an already sluggish economy. The street overlooked report that Industry body ASSOCHAM urged the government to roll out a $100-120 billion stimulus package to help revive all sectors of the economy, which has been battered by the coronavirus outbreak and the subsequent nationwide lockdown. Finally, the BSE Sensex lost 674.36 points or 2.39% to 27,590.95, while the CNX Nifty was down by 170.00 points or 2.06% to 8,083.80.