Benchmarks to open in green ahead of F&O expiry

Indian markets ended higher on Wednesday and posted biggest single-day gain of the month, as banks and financial heavyweights surged. Today, the start of F&O expiry session is likely to be positive mirroring firm global cues. Traders will be getting some encouragement with Commerce and industry minister Piyush Goyal’s statement that worst for the economy is over and revival is in the air. Meanwhile, former RBI governor Duvvuri Subbarao’s statement that the country's economy is likely to decline by 5 percent in the current fiscal but may expand by around 5 percent in the next financial year. Traders may take note of report that India may need to inject up to Rs 1.5 lakh crore rupees ($19.81 billion) into its state-owned lenders as their pile of soured assets is expected to double during the coronavirus pandemic. Also, Finance Minister Nirmala Sitharaman has emphasised the need for growing New Development Bank into a global development institution. Though, there may be some concern amid report that with 7,260 cases, India has recorded its biggest single-day spike in total number of coronavirus cases to 158,086 - just a shade behind Turkey. Worldometer data also suggests that the country has seen 190 new deaths in the past 24 hours due to the infection. With this, India's death toll has risen to 4,534. Among states, Maharashtra has the highest number of Covid-19 cases, at 56,948. There may be some cautiousness with SBI Ecowrap report stating that as the coronavirus pandemic and the nationwide lockdown severely impact the economy, India's gross domestic product for the first quarter of the financial year 2020-21 is likely to contract by over 40 per cent. Separately, India may impose anti-dumping duty on imports of a certain type of rubber used in various industries, as the domestic industry has approached the commerce ministry to investigate the alleged dumping of the product from China, European Union, Japan and Russia. Coal stocks will be in focus with report that the Centre is likely to launch the process of auctioning coal blocks for commercial mining on June 11, picking around 50 mines for the hammer.

The US markets ended in green on Wednesday as traders continued to express optimism about a quick economic recovery as the country reopens following the coronavirus lockdown. Asian markets are trading mostly higher on Thursday as growing optimism about economic recovery from the coronavirus pandemic trumped immediate concerns about a standoff between the United States and China over Hong Kong.

Back home, Wednesday’s trading session turned out to be extremely sanguine for local equity markets and concluded near day’s highest point, on the back of widespread buying by participants along with firm cues from the global markets. After making optimistic start, key indices turned cautious, as Fitch Ratings in its latest Global Economic Outlook (GEO) for May has projected Indian economy to contract 5% in current financial year (FY21) on account of slump in economic activities and very stringent lockdown policy. This is substantially lower than 0.8 percent growth for FY21 projected in April. But, markets quickly regained traction as traders found support 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. The local equity indices gathered further ground in late afternoon session, even as credit rating agency CRISIL in its latest report stated that India is staring at its worst recession in the current fiscal since Independence. The agency predicted the economy to shrink by 5 per cent in the current fiscal because of coronavirus lockdown and added that the first quarter (April to June 2020) will suffer a staggering 25 per cent contraction. Markets participants also took a note of the road transport, highways and MSME minister Nitin Gadkari’s statement that more liquidity needs to be pumped in the market to boost the coronavirus-hit economy. He also said states should come forward with Rs 20 lakh crore, while another Rs 10 lakh crore can be harnessed from public-private investment. Finally, the BSE Sensex gained 995.92 points or 3.25% to 31,605.22, while the CNX Nifty was up by 285.90 points or 3.17% to 9,314.95.