Markets likely to get optimistic start on Wednesday

Indian markets ended sharply higher on Tuesday as financials extended gains from the previous session following the RBI's announcement of Rs 50,000 crore liquidity facility for mutual funds. Today, the markets are likely to make positive start following gains in Asian peers. Traders will be getting some encouragement with private report that Finance Minister Nirmala Sitharaman is likely to announce this week a second stimulus for the economy hit by a nationwide lockdown triggered by the coronavirus pandemic, concluding multiple rounds of discussions within the government. Traders may take note of report that the Asian Development Bank has approved a $1.5 billion (about Rs 11,400 crore) loan to India to help fund its response to the novel coronavirus pandemic, including support for immediate priorities such as disease containment and prevention, as well as social protection for the poor and economically vulnerable sections. Though, investors may be concerned with report that the total number cases of coronavirus cases in India has risen 31,324, and 1,008 people have died from the fatal disease so far, according to Worldometer data. There may be some cautiousness as Moody's Investors Service cut India's growth forecast to 0.2% for 2020 from its earlier projection of 2.5%. The rating agency had earlier slashed growth estimate from 5.2% to 2.5% after the government ordered a nationwide lockdown for 21 days to contain the coronavirus. Also, Fitch Ratings said India’s sovereign rating of BBB- could come under pressure with a deteriorating fiscal outlook arising from weaker growth due to the Covid-19 outbreak and the lockdown. Meanwhile, Market regulator Sebi said it has invited proposals from researchers to commission a study on various issues of stock markets. There will be some reaction in auto stocks with Crisil’s report that auto sales are likely to remain muted as consumers may not flock to dealerships and even avoid shopping malls and markets due to the fear of coronavirus infection for an extended period post lockdown. Metal stocks will be in focus with the steel ministry’s report that India's crude steel production fell 23% to 7.38 million tonne (MT) in March as compared to the previous month, while export and import also took a beating due to the COVID-19 pandemic and the subsequent lockdown. There will be lots of earnings reaction based on the performance of the companies.

The US markets ended lower on Tuesday as technology stocks took a hit ahead of earnings reports while investors weighed moves to reopen the economy in coming weeks. Asian markets are trading in green on Wednesday as investors await the US Federal Reserve’s decision on interest rates, expected later on Wednesday stateside.

Back home, 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. 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.