Benchmarks trade slightly lower in early deals

Indian equity benchmarks made cautious start on Friday amid report that the total number of coronavirus cases in India has been rising constantly. Markets are trading in red in early deals with losses of around one third of a percent each, due to selling pressure in Auto, Bankex and Consumer Discretionary stocks. The country now is just a whisker from overtaking China - from where the virus originated. India's tally of cases now stands at 81,997 and 2,649 people have died of infections so far, according to Worldometer data. Adding pessimism, SBI research report stated that with the government's Rs 20 lakh crore stimulus package, the country's fiscal deficit is likely to be more than double to 7.9% in the current financial year. However, downside remained capped with the second tranche of relief measures by government. Finance Minister Nirmala Sitharaman has announced that the government will supply food to eight crore migrant workers in the country for the next two months. This along with promises of affordable housing and loans for street vendors.

On the global front, most of the Asian markets are trading higher, amid optimism about some states in the US partially reopening their economies. Though, gains were capped by mixed economic data from China and worries about rising tensions between the US and China over the coronavirus pandemic. China's industrial production rose in April, while fixed asset investment and retail sales fell more than expected. Meanwhile, the Bank of Japan said that producer prices in Japan were down 1.5% on month in April.

Back home, power stocks were in focus as Finance minister Nirmala Sitharaman announced a one-time emergency fund of Rs 90,000 crore to help state-owned distribution companies (discoms) pay their dues to power generating companies (gencos) and transmission companies (transcos). In scrip specific development, Cipla gained amid report that it has approached the Indian Council of Medical Research for non-exclusive licenses to manufacture the indigenously developed ELISA-based antibody test kits. On the other hand, Indiabulls Real Estate dropped as it posted a consolidated net loss of Rs 109.78 crore in the fourth quarter of FY20.

The BSE Sensex is currently trading at 31001.30, down by 121.59 points or 0.39% after trading in a range of 30909.36 and 31296.28. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.18%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Metal up by 1.37%, Telecom up by 0.70%, Oil & Gas up by 0.63%, Consumer Durables up by 0.60%, Capital Goods up by 0.27%, while Auto down by 1.14%, Bankex down by 1.10%, Consumer Discretionary down by 0.46%, IT down by 0.43%, Power down by 0.41% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.23%, Tata Steel up by 1.86%, Bharti Airtel up by 1.43%, HDFC up by 0.89% and Titan Co up by 0.70%. On the flip side, Mahindra & Mahindra down by 3.46%, Hero MotoCorp down by 1.69%, HCL Technologies down by 1.60%, Maruti Suzuki down by 1.39% and ITC down by 1.37% were the top losers.

Meanwhile, Chief Economic Advisor (CEA) K V Subramanian has ruled out any impact of stimulus on the price situation and said that the COVID-19 pandemic has severely dented the demand for non-essential or discretionary goods, creating deflationary conditions. Subramanian also said that a good part of the Rs 20 lakh crore stimulus package is designed in a manner that the fiscal deficit remains under control.

He mentioned that COVID has a significant deflationary impact because demand especially for non-essential or discretionary goods and services will go down significantly. Therefore, it is unlikely that there would be too much inflationary impact through fiscal deficit or stimulus package.

Besides, he stated that the proposed stimulus package will generate demand by infusing liquidity into the system and thus perk up the economy. He said ‘a good part of stimulus is utilising leverage to deliver...while at the same time ensuring that the fiscs remain actually under control.’

The CNX Nifty is currently trading at 9113.90, down by 28.85 points or 0.32% after trading in a range of 9082.85 and 9182.40. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.18%, ONGC up by 2.17%, Hindalco up by 1.83%, Britannia Industries up by 1.63% and BPCL up by 1.61%. On the flip side, Mahindra & Mahindra down by 3.50%, Bharti Infratel down by 2.84%, Eicher Motors down by 1.99%, HCL Technologies down by 1.81% and Maruti Suzuki down by 1.81% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 rose 87.30 points or 0.44% to 20,002.08, Straits Times inched up 1.31 points or 0.05% to 2,523.62, Hang Seng increased 67.52 points or 0.28% to 23,897.26, Taiwan Weighted advanced 43.39 points or 0.40% to 10,824.27, KOSPI improved 3.77 points or 0.20% to 1,928.73 and Shanghai Composite gained 5.11 points or 0.18% to 2,875.45, while Jakarta Composite was down by 10.15 points or 0.22% to 4,503.68.