Benchmarks trade in fine-fettle in early deals on govt’s stimulus package

Indian equity benchmarks made gap-up opening on Wednesday after the government announced Rs 20 lakh crore stimulus package to boost the economy grappling from the coronavirus pandemic. Markets are trading in fine-fettle in early deals with gains of around 2% each. Buying at Bankex, Capital Goods and Auto counters supported the markets. 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. Besides, Finance Minister Nirmala Sitharaman is expected to announce the crucial details of the stimulus package in the days to come. Meanwhile, Union health ministry data showed 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.

Global cues remained weak with most of the Asian markets trading in red following the negative cues overnight from Wall Street amid fears the easing of lockdown restrictions around the world will lead to a second wave of coronavirus infections. Worries about US-China tensions also weighed on the markets after a leading US Republican senator proposed a legislation that would authorize President Donald Trump to impose sanctions on China if it did not provide a full account of the events leading to the coronavirus outbreak.

Back home, auto component industry stocks were in focus 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. In scrip specific development, Glenmark Pharmaceuticals gained amid reports that it has initiated human trials of Favipiravir to treat mild to moderate Covid-19.

The BSE Sensex is currently trading at 31994.82, up by 623.70 points or 1.99% after trading in a range of 31931.90 and 32845.48. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 0.82%, while Small cap index was up by 1.29%.

The gaining sectoral indices on the BSE were Bankex up by 3.74%, Capital Goods up by 3.63%, Auto up by 2.70%, Industrials up by 2.49%, Basic Materials up by 2.23% while, Healthcare down by 0.49%, Telecom down by 0.27% were the losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 5.09%, ICICI Bank up by 5.02%, Mahindra & Mahindra up by 4.24%, Axis Bank up by 4.12% and Hero MotoCorp up by 4.09%. On the flip side, Nestle down by 1.92%, Sun Pharma down by 1.17% and Bharti Airtel down by 0.71% were the few losers.

Meanwhile, India's industrial output, measured in Index of Industrial Production (IIP), contracted by 16.7% in March 2020 mainly on account of poor show by mining, manufacturing and electricity sector due to the nationwide lockdown. The IIP had grown by 2.7% in March 2019. The IIP in the last fiscal contracted by 0.7% from 3.8% expansion in the 2018-19. The government had imposed lockdown to contain Covid-19 from March 25, 2020. As per the data released by the National Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of March 2020 stood at 120.1.

On the sectoral front, manufacturing sector output fell by 20.6% compared to a growth of 3.1% in the same month a year ago. Electricity generation declined by 6.8% as against a growth of 2.2% in March 2019. Mining sector output remained flat compared to a growth of 0.8% earlier. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of March 2020 stand at 132.7, 114.8 and 149.2, respectively.

Besides, production of capital goods, a measure of investment, remained in negative with contraction of 35.6% in March over contraction of 9.1% in the corresponding month of last year. As per Use-based classification, the growth rates in March 2020 over March 2019 are -3.1% in Primary goods, -18.5% in Intermediate goods and -23.8% in Infrastructure/ Construction Goods. The growth in consumer durables and consumer non-durables was -33.1% and -16.2%, respectively.

The CNX Nifty is currently trading at 9361.15, up by 164.60 points or 1.79% after trading in a range of 9351.10 and 9584.50. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 4.80%, ICICI Bank up by 4.76%, Mahindra & Mahindra up by 4.31%, Hero MotoCorp up by 4.14% and Bajaj Finance up by 4.03%. On the flip side, Nestle down by 2.04%, GAIL India down by 1.35%, Sun Pharma down by 1.05%, Bharti Airtel down by 0.87% and Dr. Reddy’s Lab down by 0.33% were the top losers.

Asian markets are trading mostly lower; Nikkei 225 slipped 112.78 points or 0.55% to 20,253.70, Straits Times declined 8.02 points or 0.31% to 2,579.79, KOSPI inched down 0.03 points to 1,922.14, Jakarta Composite lost 41.90 points or 0.91% to 4,546.83 and Shanghai Composite was down by 5.34 points or 0.18% to 2,886.22. On the other hand, Hang Seng increased 1.96 points or 0.01% to 24,247.64 and Taiwan Weighted was up by 17.15 points or 0.16% to 10,896.62.