Markets trade in fine-fettle in early deals amid firm global cues

Indian equity benchmarks made gap-up opening on Monday in line with firm cues from global markets. Markets are trading in fine-fettle in early deals with gains of around 2% each, supported by buying in Auto, Energy and Metal counters. Traders are looking ahead to the Prime Minister Narendra Modi’s another meeting with chief ministers (CMs) of all states on May 11. He is expected to discuss the plan for exit from the ongoing nationwide lockdown to prevent the spread of coronavirus. Besides, Finance minister Nirmala Sitharaman will hold a meeting with top executives of state-run banks on May 11 to review a raft of issues, including credit flow to key sectors like MSMEs and NBFCs, rate transmission to borrowers and progress under the targeted long-term repo operations (TLTRO). Some support came in with report that the government is working on several initiatives, such as preparation of huge land pools, to attract potential investors to India amid the coronavirus-triggered turbulence. Meanwhile, the Worldometer data showed that the number of coronavirus cases in India jumped to 67,161 and the death toll rose to 2,212 by May 11. Also, as many as 401 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns of over Rs 4.06 trillion owing to delays and other reasons.

On the global front, all the Asian markets are trading in positive territory following the rally on Wall Street Friday after a report released by the Labor Department showed US non-farm employment plummeted in April, but was not as bad as expected. Optimism about an economic rebound as governments in more countries begin to ease conavirus lockdown restrictions also lifted the markets. Besides, the Japanese government is looking to lift a state of emergency in prefectures that are not among the hardest hit by the coronavirus pandemic even before the nationwide state of emergency ends on May 31.

Back home, Indian Railways will resume booking passenger train tickets on the IRCTC website from May 11. On the sectoral front, pharma stocks were in focus as the Pharmaceutical Exports Promotion Council of India (Pharmexcil) report stated that the drop in exports in February and March has dragged pharmaceutical export growth down to a single digit of 7.57% to $20.58 billion in the year 2019-20. In scrip specific developments, Cipla rose on receiving the Establishment Inspection Report from the U.S. FDA for its API manufacturing facility in Bommasandra, Bangalore. Godrej Properties and Wockhardt climbed ahead of their earnings. On the other hand, ICICI Bank shed after its quarterly profit came in below Street estimates because of higher provisioning for the coronavirus pandemic.

The BSE Sensex is currently trading at 32257.48, up by 614.78 points or 1.94% after trading in a range of 31960.82 and 32301.58. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.36%, while Small cap index was up by 1.02%.

The top gaining sectoral indices on the BSE were Auto up by 3.03%, Energy up by 2.64%, Metal up by 2.58%, TECK up by 2.31%, IT up by 2.30%, while there was no losers.

The top gainers on the Sensex were Maruti Suzuki up by 3.68%, Ultratech Cement up by 3.65%, Indusind Bank up by 3.59%, Hero MotoCorp up by 3.40% and Bajaj Auto up by 3.38%. On the flip side, Nestle down by 1.03% and ICICI Bank down by 0.30% were the only losers.

Meanwhile, former chief economist of World Bank -- Kaushik Basu has said that India needs a large fiscal stimulus as the country faces big risk of slowdown in the economic growth on account of COVID-19. Basu suggested that the government may need monetisation by the Reserve Bank of India. He said inequality in India is already very high and coronavirus pandemic will make it rise further. There are dark clouds over every economy in the world, and India is no exception.

He mentioned ‘we do need a large fiscal stimulus. India has the FRBM Act, 2003, for fiscal management and to make sure that government does not overspend. But the FRBM is a sophisticated piece of legislation that recognises that, during times of natural calamity, we should be allowed to run up larger deficit.’ He said the Centre must give states the freedom to spend more, respecting India's federal structure. He added that if this continues for too long, it can unleash inflation, so this will have to be a short-period intervention.

On India's strategy to exit from the lockdown, he said several countries in Europe and East Asia have started easing restrictions, and one can see the benefits they are getting from exchange rates and capital flow data. It is not easy exiting from the lockdown but if India is determined, India can do it. Further, he pointed out that when it comes to COVID-19 deaths, India's numbers are lower than in all European nations. Germany is one of the world's best managed nations but the risk of COVID-19 death in Germany is 80 times greater compared to India.

The CNX Nifty is currently trading at 9422.30, up by 170.80 points or 1.85% after trading in a range of 9341.55 and 9439.90. There were 47 stocks advancing against 3 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 5.12%, Zee Entertainment up by 4.71%, Maruti Suzuki up by 3.67%, Ultratech Cement up by 3.62% and Indusind Bank up by 3.58%. On the flip side, Dr. Reddys Lab down by 2.63%, Nestle down by 0.94% and ICICI Bank down by 0.47% were the few losers.

All the Asian markets are trading in green; Nikkei 225 surged 326.71 points or 1.62% to 20,505.80, Straits Times rose 9.41 points or 0.36% to 2,601.29, Hang Seng soared 481.06 points or 1.99% to 24,711.23, Taiwan Weighted jumped 121.02 points or 1.11% to 11,022.44, KOSPI inched up 1.52 points or 0.08% to 1,947.34, Jakarta Composite increased 44.81 points or 0.97% to 4,642.24 and Shanghai Composite was up by 3.67 points or 0.13% to 2,899.01.