Markets to get gap-up start after Rs 20 lakh crore stimulus package

Indian markets ended lower for second straight session on Tuesday with weak global cues and rising coronavirus cases in India keeping investors nervous. Today, the start of session is likely to be gap-up after Prime Minister Narendra Modi announced a stimulus package totalling Rs 20 lakh crore to rescue the economy reeling under the impact of coronavirus. This amounts to nearly 10% of India's GDP. This economic package will focus on areas like land, labour, liquidity and law. He added that the lockdown will continue post May 17 with new rules, which may cap the gains. Some support will also come as India Inc said Prime Minister Narendra Modi's announcement of a Rs 20 lakh crore stimulus package was the need of the hour as it will pave the way for post pandemic recovery and unleash the next wave of economic growth. Besides, Finance Minister Nirmala Sitharaman is expected to announce the crucial details of the stimulus package in the days to come. Though, there may be some cautiousness with Union health ministry data showing that India’s tally of the coronavirus disease (Covid-19) crossed the bleak 70,000-mark on May 13 morning as more than 3,600 new infections were reported in the last 24 hours. Traders may be concerned with the government data showing that the country's industrial output declined by 16.7% in March, mainly on account of poor show by mining, manufacturing and electricity sector due to the nationwide lockdown. Besides, the government has released the consumer price index-based inflation (CPI) data only for certain sub-groups, but did not give the general CPI number, citing difficulties in collecting the data due to the Covid-19 pandemic. However, it revised the CPI inflation for March to 5.84% from 5.91%. There will be some reaction in auto component industry stocks with Ind-Ra’s report that auto component industry is likely to witness a second consecutive year of a double-digit de-growth this fiscal mainly on account of disruption in operations due to coronavirus pandemic and the subsequent lockdown. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended sharply lower on Tuesday amid renewed coronavirus concerns after Dr. Anthony Fauci warned of suffering and death if the country reopens prematurely. Asian markets are trading mixed on Wednesday as caution remains over a recent resurgence in coronavirus cases in certain countries regionally.

Back home, Indian equity benchmarks came off their intraday lows but failed to erase all the losses and ended on pessimistic note on Tuesday, on concern that the nationwide lockdown may extend amid a rise in virus-infected cases. Markets ended lower for second straight day, with Sensex and Nifty settling below their crucial 31,400 and 9,200 levels, respectively. Markets made gap-down opening, following weak trend seen in other Asian markets. Traders also remained wary with a foreign brokerage in its report estimating that the fiscal deficit to come at 5.8% of the GDP in FY21 as against the budget target of 3.5%, after the government's move to raise its market borrowing programme for the current financial year by Rs 4.2 lakh crore. However, Key indices witnessed sharp recovery in the last hour of the session, taking support from Union minister Nitin Gadkari’s statement that he expects the Centre to unveil a financial package in two-three days, observing that the situation was very bad despite the three-month moratorium on loan repayments announced by the RBI. Some support also came with the report that government released Rs 6,195.08 crore to 14 states as the second equated monthly installment of the Post Devolution Revenue Deficit Grant on May 11. But, markets breadth remained negative, as traders remained on the sidelines ahead of the industrial production data for March and consumer inflation for April, slated to be announced later in the day. Finally, the BSE Sensex lost 190.10 points or 0.60% to 31,371.12, while the CNX Nifty was down by 42.65 points or 0.46% to 9,196.55.