Markets to get optimistic start amid firm global cues

Indian markets ended deeply in red on Monday as investors were disappointed by government measures to aid an economic recovery. Today, the markets are likely to make optimistic start following firm cues from global markets. Some support will come with Minister for MSMEs and road transport and highways Nitin Gadkari’s statement that the recent steps announced by the government to boost liquidity and credit flows would also bolster the purchasing power of the people via employment creation and help accelerate the wheels of the economy. Traders may take note of Expenditure secretary TV Somanathan’s statement that this is a challenging year for the central government due to the serious revenue impact of the coronavirus crisis, but added that the Centre had no plan of carrying out poorly calibrated expenditure cuts. Though, there may be some cautiousness amid rising coronavirus cases in India as the Worldometer data showed that the total number of coronavirus cases in the country has topped the 100,000 mark. As many as 3,156 people have died from the disease in the country, while a little over 39,000 have recovered. Traders may be also concerned with a private report that the combined fiscal deficit of the Centre and states will top 12 percent of the GDP because of the recent economy boosting measures, and higher borrowings by States to meet COVID-19 exigencies. There will be some buzz in the power stocks with global ratings agency Standard & Poor's (S&P) statement that the government's stimulus measures will only provide a temporary lifeline to state-owned power distribution companies as the coronavirus pandemic has increased liquidity pressure for these firms. Auto stocks will be in focus with Industry body Society of Indian Automobile Manufacturers’ (SIAM) statement that the government's economic stimulus package will not create demand.

The US markets ended sharply higher on Monday after Moderna (MRNA) reported positive phase one results for a potential coronavirus vaccine. Asian markets are trading in green on Tuesday as hopes rise on a potential coronavirus vaccine after a positive development from a Moderna trial.

Back home, Indian equity benchmarks ended Monday’s trade on a pessimistic note with heavy losses of around three and half percent as Union home ministry extended the lockdown for another two weeks till May 31 to contain the spread of coronavirus. Markets traded in negative note since beginning, as domestic cases of the novel coronavirus continued to rise steadily. Selling further crept in 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. Local bourses added more losses in late afternoon session, as sentiments remained down-beat with former finance minister P Chidambaram’s statement that the fiscal stimulus package announced by the government is hopelessly inadequate given the gravity of the economic crisis as it amounts to only Rs 1.86 lakh crore, which is 0.91 percent of the GDP. He also said the stimulus package has left several sections like the poor, migrants, farmers, laborers, workers, small shopkeepers, and middle class high and dry. Traders even overlooked Finance Minister Nirmala Sitharaman’s statement that the government would frame a policy where private entities are allowed to participate in all sectors. The government will also notify a list of strategic sectors where the presence of public sector enterprises (PSEs) is required. Finally, the BSE Sensex fell 1068.75 points or 3.44% to 30,028.98, while the CNX Nifty was down by 313.60 points or 3.43% to 8,823.25.