Markets to get optimistic start of new week

Indian markets, before going for a long weekend holiday, ended lower on Friday as a slew of measures announced by the Reserve Bank of India (RBI) to revive the economy failed to meet market expectations. Indian equity markets remain closed on Monday for Eid-ul-Fitar. Today, the start of week is likely to be optimistic following firm cues from Asian peers. Traders will be getting encouragement with Niti Aayog Vice Chairman Rajiv Kumar’s statement that there is a need to convert development into mass movement, and India should aspire to become second or third largest economy in the world by 2047.  Some support will come with report that investments through participatory notes (P-notes) in the domestic capital market increased to Rs 57,100 crore as of April 30 after falling to over 15-year low at the end of the preceding month. Also, a report stated that reversing their selling trend, foreign investors have infused over Rs 9,000 crore into the Indian equity markets in May so far amid attractive valuations of stocks and a mega block deal. Though, there may be some cautiousness with report that amid global speculation that Covid-19 may begin to tail off in the summer, India is witnessing its steepest jumps in cases over the past few days, even as mercury across the country is on the rise. India has witnessed an increase of over 5 per cent every day in the total number of cases for the past nine days. The country witnessed 6,977 new Covid-19 cases, taking the tally to 1,38,845. Traders may also be concerned as Icra projected the economy to grow by 1.9 per cent in the fourth quarter against 5.8 a year ago and 4.3 per cent in 2019-20 against 6.1 per cent in 2018-19. Meanwhile, the Central Board of Indirect Taxes (CBIC) said it has sanctioned GST refund claims worth Rs 11,052 crore in 47 days. Metal stocks will be in focus with the World Steel Association’s report that India’s crude steel output declined over 65 per cent to 3.13 million tonnes (MT) during April. There will be some reaction in power stocks with India Ratings’ (Ind-Ra) statement that even as the global economic slowdown and COVID crisis have severely hit the steel industry, players engaged in supply of transmission and distribution (T&D) equipment are expected to be more resilient mainly on the back of government orders.

The US markets were closed on Monday for the Memorial Day holiday. Asian markets are trading in green on Tuesday after American biotech firm Novavax said it started the first human study of its experimental coronavirus vaccine.

Back home, pausing three-day gaining streak, Indian equity benchmarks ended Friday’s session on lower note with losses of more than half percent, following weak cues from other Asian markets. Markets started the session in negative territory, as India Ratings (Ind-Ra) expects most sectors to experience varying degrees of revenue contraction during FY21 due to demand and supply disruptions caused by the novel coronavirus, or COVID-19, pandemic. Selling further crept in amid the Reserve Bank of India (RBI) unexpectedly slashed benchmark interest rates to their lowest levels since 2000 and extended the moratorium on repayment of bank for three months to ramp up support for the economy which is likely to contract for the first time in over four decades. The central bank, which advanced the monetary policy committee (MPC) meeting for the second time since March, extended the three-month moratorium of loan repayments, from June 1 to August 31 and raised the limit on banks' group exposure to companies. Key bourses continued their weak run in final hour of trade, as Moody's Investors Service said India's economy is expected to contract for the first time in more than four decades saying economic damage owing to the coronavirus-induced lockdown will be significant with lower consumption and sluggish business activity. However, markets managed to pared some initial losses as traders found some support with Commerce and Industry Minister Piyush Goyal’s statement that in order to make India a self-reliant country and a global supplier, the government has recognised 12 sectors, including auto components, textiles, industrial machinery and furniture, where attention would be given. Goyal said that a self-reliant India will ensure production of quality products on a large scale, fulfil India's requirements and encourage export of surplus production. Finally, the BSE Sensex lost 260.31 points or 0.84% to 30,672.59, while the CNX Nifty was down by 67.00 points or 0.74% to 9,039.25.