Key indices end higher for second straight day

Indian markets continued their winning run for the second straight day and ended with gains of over a percent on Tuesday, amidst positive global cues as governments across the world started easing economic lockdown. Key indices made an optimistic start, as traders took encouragement with report that Prime Minister Narendra Modi has underlined that the lockdown has yielded positive results as the country has managed to save thousands of lives in the past one and a half months. Some support also came as the Reserve Bank of India (RBI) received Rs 64,746 crore worth of bids or more than six times the amount it proposed to buy government bonds through the special open market operation (OMO).

However, the markets trimmed most of gains in early noon session, as CRISIL, domestic rating agency, has nearly halved its Gross Domestic Product (GDP) forecast for India to 1.8 percent for FY21 while projecting total losses of Rs 10 lakh crore or Rs 7,000 per person due to disastrous lockdowns to control COVID-19 pandemic. It warned lockdowns are showing a disastrous impact on the economy and could lead to a permanent loss of GDP, unemployment and poverty, despite relief packages. But, key indices regained momentum to end with decent gains taking support from a private report that the central government is considering a proposal to guarantee as much as Rs 3 trillion ($39 billion) of loans to small businesses as part of a plan to restart economy, which is reeling under the impact of a 40-day lockdown.

On the global front, Asian markets ended mostly in green on Tuesday, as investors track government moves to ease lockdown measures around the world, helping extend the previous day’s rally, but US oil prices suffered another collapse. European markets were trading higher as a slate of strong earnings reports from companies, including Novartis and UBS, outweighed a slump in oil prices and shares of Wirecard. Back home, the insurance stocks were in focus with Irdai’s data showing that India's life insurance companies clocked 11.36% growth in their collective premium income at Rs 48.26 lakh crore during the fiscal ended March 2020.

Finally, the BSE Sensex gained 371.44 points or 1.17% to 32,114.52, while the CNX Nifty was up by 98.60 points or 1.06% to 9,380.90.

The BSE Sensex touched high and low of 32,199.91 and 31,661.34, respectively and there were 17 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.80%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Finance up by 3.53%, Bankex up by 2.94%, Consumer Durables up by 1.82%, Realty up by 0.86%, Oil & Gas up by 0.86% and Basic Materials up by 0.66%, while Healthcare down by 1.65%, Telecom down by 1.40%, FMCG down by 0.94%, Power down by 0.86%, Metal down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 15.11%, Bajaj Finance up by 9.04%, HDFC up by 7.74%, Axis Bank up by 6.61% and ICICI Bank up by 3.44%. On the flip side, Sun Pharma down by 3.27%, NTPC down by 2.11%, Nestle down by 2.09%, HCL Technologies down by 1.99% and Bharti Airtel down by 1.79% were the top losers.

Meanwhile, in the wake of the coronavirus outbreak, credit rating agency, India Ratings and Research (Ind-Ra) has cut India’s gross domestic product (GDP) growth further down to 1.9% for FY21 from its forecast of 3.6% published on March 30, 2020. As per the latest report,  this will be the lowest GDP growth in the last 29 years (FY92: GDP grew 1.1%) and is based on the assumption that the partial lockdown will continue till mid-May 2020.

The rating agency is expecting GDP may come back to the Q4 FY20 level only by Q3 FY21, anticipating resumption of normal economic activities during Q2 FY21 and festive demand during Q3 FY21. However, it said that if the lockdown continues beyond mid May 2020 and a gradual recovery takes root only from end-June 2020, GDP growth may slip further to negative 2.1%, lowest in the last 41 years and only the sixth instance of contraction since FY52.

On the fiscal front, Ind-Ra noted that the dip in tax/non tax revenue due to the lockdown/growth slowdown coupled with the need to provide fiscal stimulus will destabilise the fiscal arithmetic of both union and state governments. Even without any significant fiscal stimulus, Ind-Ra expects the fiscal deficit of the union government to escalate to 4.4% of GDP in FY21 (FY21 Budget Estimate: 3.5% of GDP) and a stimulus package of Rs 4 trillion would push it to 6.0% of GDP.

The CNX Nifty traded in a range of 9,404.40 and 9,260.00 and there were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 17.07%, Bajaj Finance up by 9.32%, HDFC up by 8.33%, Axis Bank up by 7.07% and Bajaj Finserv up by 5.36%. On the flip side, Sun Pharma down by 3.02%, Indian Oil Corporation down by 2.33%, NTPC down by 2.11%, Vedanta up by 2.10%, Nestle down by 2.09% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 78.94 points or 1.35% to 5,925.73, France’s CAC rose 53.32 points or 1.18% to 4,558.58 and Germany’s DAX was up by 156.92 points or 1.47% to 10,816.91.

Asian markets ended mostly higher on Tuesday due to easing of corona virus-related restrictions in many countries. Markets' sentiment improved further by tracking strong gains in Wall Street overnight after New York Governor announced plans for a phased reopening of his state's economy, citing a steady decline in corona virus hospitalization rates. Though, some gains were capped after oil extended its losses amid mounting fears that storage around the world could reach full capacity soon. Meanwhile, Japanese shares ended almost flat as investors adopted a cautious approach ahead of Golden Week spring holidays and the announcement of corporate earnings. Further, data showing Japan's unemployment rate rose to a one-year high in March and job availability slipped to a more than a three-year low as the corona virus outbreak and containment measures caused the nation's job market to deteriorate.