Markets to get flat-to-positive start of new week

Indian markets ended range-bound trade in red territory with marginal losses on Friday amid rising coronavirus cases. Today, the start of new week is likely to be flat-to-positive following Asian peers and slew of measures announced by Finance Minister Nirmala Sitharaman to boost the economy amid the coronavirus-led disruption. Finance Minister Nirmala Sitharaman announced the fifth and final tranche of measures under Prime Minister Narendra Modi’s ambitious Atmanirbhar Bharat Abhiyan outlining India’s massive Rs 20 lakh crore economic package on May 17. Also, the Reserve Bank of India’s (RBI) data showed that the country's foreign exchange reserves surged by $4.235 billion to $485.313 billion in the week to May 8 on account of rise in the foreign currency assets. Traders may take note that Finance Minister Nirmala Sitharaman said the government will frame a policy where private entities are allowed to participate in all sectors. However, there may be some cautiousness as Union home ministry on May 17 extended the lockdown for another two weeks till May 31 to contain the spread of coronavirus. The number of new cases topped 5,000 in a single day for the first time on May 17 on the back of another explosion in Maharashtra, which reported a record 2347 fresh infections, while as many as 154 death from the virus reported on May 17. Traders may be concerned with the commerce and industry ministry’s data showing that India’s exports contracted by a record 60.28 per cent to $10.36 billion in April amid the coronavirus lockdown. Imports too tumbled by 58.65 per cent to $17.12 billion in April from $41.4 billion in the same month last year. Besides, the trade deficit narrowed to $6.76 billion. Trade deficit in April 2019 stood at $15.33 billion. Also, a private report stated that the economic package announced by the Narendra Modi government over the past few days to help economic recovery is unlikely to have an immediate impact on growth, and it estimates real GDP to fall by 5 percent in fiscal year 2021. Meanwhile, Finance Minister Nirmala Sitharaman said the Centre has increased borrowing limits for states to 5 percent from 3 percent for FY21. There will be some buzz in the power stocks with Power Minister R K Singh’s statement that the revised tariff policy has been cleared by a group of ministers and it is likely to be implemented within a month. The policy provides for steps like penalty for unscheduled power cuts by distribution companies. Coal stocks will be in focus as the Union government opened up the mining sector in a big push for privatisation. There will be some reaction in aviation stocks with a private report that the aviation reforms Finance Minister Nirmala Sitharaman listed reiterate steps announced before and will not immediately help airlines bleeding in the nationwide lockdown to contain the coronavirus.

The US markets ended in green on Friday as traders shrugged off the release of some dismal US economic data, including reports showing record decreases in retail sales and industrial production in the month of April. Asian markets are trading mostly higher on Monday as more countries re-opened their economies, stirring hopes the world was nearer to emerging from recession.

Back home, Indian equity benchmarks gave up most of their losses in last leg of trade to come off their intraday low points, but failed to erase all losses and ended with minor cut. Key indices made cautious start as total number of coronavirus cases in India has been rising constantly. Selling further crept in as 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. Markets extended their losses in the afternoon session, after Asian Development Bank (ADB) said the global economy is expected to suffer $5.8-8.8 trillion in losses due to the coronavirus pandemic. Of this, the impact on south Asian gross domestic product (GDP) will be to the tune of $142-218 billion. However, key indices staged a sharp recovery from the intraday losses in late afternoon session, as traders found some solace with India Inc stating that the second tranche of the stimulus package will provide relief to the most vulnerable sections of the society reeling under the impact of COVID-19 and boost the housing sector, aiding economic growth. The government announced a Rs 3.16 lakh crore package of free foodgrains for migrant workers, concessional credit to farmers and working capital loan for street vendors as part of the second tranche of fiscal stimulus to heal an economy hit hard by the lockdown. Meanwhile, the government said 2.5 crore farmers, including fishermen and those involved in animal husbandry, would get Rs 2 lakh crore of concessional credit through Kisan Credit Cards under its economic stimulus package. Finally, the BSE Sensex fell 25.16 points or 0.08% to 31,097.73, while the CNX Nifty was down by 5.90 points or 0.06% to 9,136.85.