Benchmarks to make negative start on Wednesday

Indian markets ended significantly higher on Tuesday as investors looked for more central bank and government stimulus to counter the economic fallout from the pandemic. Today, the markets are likely to get negative start amid weakness in global peers. Investors may react to reports suggesting that the government is mulling extending the nationwide coronavirus lockdown beyond April 14 amid requests from the States. The total number of confirmed Covid-19 cases in India stands at 4,789 as the country entered the fifteenth day of a 21-day countrywide lockdown to curb the spread of the deadly disease. Around 124 people have died due to the disease. There will be some cautiousness as ratings agency ICRA predicted that India's economy is likely to witness a sharp contraction of 4.5 per cent during Q4FY2020 and is expected to post a GDP growth of just 2 percent in FY2021. Traders may take note of former finance secretary Subhash Chandra Garg’s statement that the Centre may need to borrow 2-2.5 per cent of GDP or about Rs 4-5 lakh crore additionally for supporting people and businesses hit hard by the coronavirus outbreak and nationwide lockdown. Meanwhile, to provide greater flexibility to state governments to tide over cash flow mismatches, the Reserve Bank of India (RBI) has increased the number of days for which a state or a Union Territory (UT) can be in overdraft at a stretch to 21 working days from 14 at present. Sugar stocks will be in focus amid private report that sugar mills have urged government-owned oil marketing companies (OMCs) to float the third tender for ethanol procurement because of the expectations of excess production of the green fuel on additional quantity of cane being crushed this season.

The US markets ended lower on Tuesday as New York Governor Andrew Cuomo revealed that coronavirus deaths in his state spiked by 731, reflecting the biggest one-day increase. Asian markets are trading mostly in red on Wednesday as investors continue to weigh signs of a slowing rate of the Covid-19 spread against more deaths.

Back home, Indian equity benchmarks witnessed biggest single-day gain ever in absolute terms on Tuesday by rallying over eight and half percent in the session, tracking gains in Asian markets, even as domestic Covid-19 cases continue to rise in the country. Key gauges opened with a strong gap on the upside and traded jubilantly for whole day as traders took 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 solace also came in 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. Markets continued their strong bullish momentum in late trade as the commerce ministry designed an online platform for issuance of a key document required for exports to those countries with which India has trade agreements, with a view to facilitate shipments during the COVID-19 crisis. Traders ignored 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. Investors also paid no heed towards a 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. Finally, the BSE Sensex gained 2476.26 points or 8.97% to 30,067.21, while the CNX Nifty was up by 708.40 points or 8.76% to 8,792.20.