Benchmarks to make negative start; TCS result eyed

Indian markets ended lower on Wednesday amid weak cues from Asia and Europe and expectations of a widely expected painful quarterly earnings season due to the Covid-19 pandemic. Today, the markets are likely to make negative start following weak global cues. Traders will be worried over rising coronavirus cases. The Union Health Ministry has identified 170 districts as Covid-19 hotspots and 207 districts as potential hotspots. According to Worldometer tally, India had over 12,000 cases and 400 deaths. There will be some cautiousness with government data showing that India's exports dipped by 34.57% to $21.41 billion in March, while Imports fell by 28.72% to $31.16 billion. Besides, trade deficit narrowed to $9.76 billion in March this year from $11 billion in the same month last year. Traders will be concerned with Fitch Ratings’ report that the Indian government has less fiscal room to support the economy compared to many of its peers and the country's credit profile would weaken if a wider fiscal deficit increases the debt-GDP ratio. It added that India's debt-to-GDP ratio is likely to rise to 76% from 70% currently due to wider fiscal deficit and low economic growth. Though, some support may come later in the day with Niti Aayog Vice Chairman Rajiv Kumar’s statement that India's GDP growth will see strong recovery from the second quarter of this fiscal as economic activities resume. Traders may take note of IMF’s statement that there is more scope for more urgent policy actions in India as the economic toll from the coronavirus pandemic is likely to be large, and it noted that the fiscal stimulus package unveiled by the government to mitigate the impact of the COVID-19 is a step in the right direction. There will be some buzz in the MSME stocks with Union Minister Nitin Gadkari’s statement that a Rs 10,000 crore will soon be approved by the government to buy up to 15% equity in MSMEs with high credit rating that want to list on stock exchanges and raise money from the capital markets. Investors will be looking ahead to the Tata Consultancy Services’ (TCS) Q4 result to be out later in the day.

The US markets ended lower on Wednesday as the latest earnings and economic reports reminded investors of the devastating economic impact of the coronavirus pandemic. Asian markets are trading mostly in red on Thursday as concerns over the scale of the economic fallout of the coronavirus pandemic continued to weigh on sentiment.

Back home, Indian equity benchmarks traded with a positive bias for most part of the day but selling activity which took place during late hour of trade mainly forced the markets to cut all of their gains and ended Wednesday's session in red terrain, as concerns over the rise in Covid19 cases across the nation and worldwide kept domestic investors cautious. Markets made gap-up opening and traded in fine fettle, as traders took encouragement with the government data showing that the consumer Price Index-based (CPI) inflation eased for the second month in a row in March, at 5.91%, on the back of further reduction in rate of food inflation.  Some optimism also came with report that the government may soon come up with details of a second stimulus package. However, key indices failed to maintain their momentum and turned bearish in the last leg of trade, as the International Monetary Fund (IMF) cut its projection for India's economic growth to 1.9% for the current financial year, the lowest since the 1991 balance of payments (BoP) crisis, against its 5.8% forecast earlier. Traders paid no heed towards data showing that India’s wholesale price index (WPI) inflation cooled to 1% for the month of March 2020 as compared to 2.26% for the previous month and 3.10% during the corresponding month of the previous year, on account of sharp fall in food prices in the country. Market participants even overlooked the India Meteorological Department’s (IMD) announcement that it expects monsoon rainfall to be normal this year. Southwest monsoon seasonal (June to September) rainfall over the country as a whole is likely to be normal (96-104%). Finally, the BSE Sensex lost 310.21 points or 1.01% to 30,379.81, while the CNX Nifty was down by 68.55 points or 0.76% to 8,925.30.