Markets to open in red on Wednesday

Indian markets wiped out early gains and ended marginally lower on Tuesday, as concerns about rising coronavirus cases in the country overshadowed positive cues from global markets. Today, the markets are likely to open in red amid mixed Asian cues and economic growth concerns. There will be some cautiousness with rising coronavirus cases in India. In the last 24 hours, India recorded a spike of 6,535 new COVID-19 cases and 146 deaths.  The total number of cases in the country now stands at 1,45,380 including 80,722 active cases, 60,490 cured/discharged. Ministry of Health and Family Welfare said the death toll has reached 4,167. Traders will be concerned as Fitch Ratings forecast a 5 percent contraction of Indian economy in the current fiscal, on account of slump in economic activities and very stringent lockdown policy. This is substantially lower than 0.8 percent growth for 2020-21 fiscal projected in April. Also, highlighting the grave economic impact of COVID-19, Crisil has said India is staring at its worst recession since Independence. However, some support may come later in the day with report that the government notified the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme for Medium, Small and Micro Enterprises (MSMEs) under the Atma Nirbhar Bharat Abhiyan to help them tide over the economic distress being faced due to the COVID-19 pandemic. Some encouragement may also come with Union Minister for MSMEs and Road Transport and Highways, Nitin Gadkari’s statement that the government is exploring new financial lending institutions to support small-scale units in terms of financial support. Traders may take note of the Confederation of Indian Industry’s (CII) report stating that despite the relaxations and packages announced for the farm sector following the Covid-19 lockdown, logistics of perishables commodities such as fruits and vegetables could be further streamlined to ensure remunerative return to farmers who have seen sharp drop in demand due to lockdown. Power stocks will be in focus with India Ratings and Research’s (Ind-Ra) statement that the Rs 90,000 crore package would provide only a temporary relief to power distribution companies but not long-term stability.

The US markets ended higher on Tuesday as optimism grew about the reopening of the economy and a potential coronavirus vaccine. Asian markets are trading mixed on Wednesday as rising US-China tensions tempered optimism about the global economy recovering from the coronavirus outbreak.

Back home, in a volatile session, Indian equity benchmarks failed to hold on to their opening gains and ended with minor losses on Tuesday, as spiking number of COVID-19 cases in the country created an uncertainty about lockdown measures going ahead. Key indices made an optimistic start and traded in fine-fettle, following positive cues from other Asian markets. Traders took support with Securities and Exchange Board of India (SEBI) in its latest data showing that the share of foreign portfolio investments (FPIs) in domestic capital markets through participatory notes (P-notes) increased to Rs 57,100 crore at the end of April after falling to over 15-year low of Rs 48,006 at the end of the preceding month. Trading sentiments remained optimistic in afternoon deals as Union Minister for MSME and Road Transport and Highways, Nitin Gadkari said that the government is exploring new financial lending institutions to support small-scale units in terms of financial support. Gadkari said that government is working towards strengthening the NBFCs which will help small businesses to avail easy credit in the coming time. However, key indices gave up all the day's gains and slipped into negative territory in the last hour of the trade, as sentiments turned pessimistic with credit rating agency, India Ratings and Research’s (Ind-Ra) report stated that the aggregate fiscal deficit of states is expected to now rise to 4.5 per cent of gross domestic product (GDP) in FY21 as against the agency's earlier forecast of 3 per cent. Some concern also came with ICRA’s report that the sudden pause in economic activity in many sectors after the commencement of the lockdown and its associated impact on profitability, are expected to have dampened GDP growth to 1.9 percent in Q4 FY20, despite the healthy trends in the Rabi season. Finally, the BSE Sensex lost 63.29 points or 0.21% to 30,609.30, while the CNX Nifty was down by 10.20 points or 0.11% to 9,029.05.