Benchmarks to make optimistic start of new week

Indian markets ended higher for the third straights session on Friday led by FMCG, auto and pharma stocks. Today, the start of news week is likely to be optimistic after the home ministry allowed areas outside containment zones to be reopened in a phased manner. Positive cues from the Asian peers may also support the domestic markets. Traders will be eyeing manufacturing PMI data to be out later in the day. The home ministry has extended the lockdown in containment zones till June 30, and directed that areas outside containment zones be opened up in a phased manner. All activities that were prohibited earlier will be opened up in areas outside Containment Zones in a phased manner. Some support will also come with Commerce minister Piyush Goyal’s statement that most startups will be eligible for additional liquidity and funding under the credit and funding support announced for MSMEs under the Aatmanirbhar Bharat Abhiyan package. Besides, Reserve Bank of India’s (RBI) data showing that the country's foreign exchange reserves swelled by $3.005 billion to a lifetime high of $490.044 billion in the week to May 22, mainly on account of a rise in foreign currency assets. In the previous week, the reserves had increased by $1.726 billion to $487.04 billion. Though, there may be some cautiousness with the National Statistical Office (NSO) data showing that India's economic growth slipped to 3.1% in the January-March quarter of 2019-20 compared to growth of 5.7% in the corresponding quarter of 2018-19showing impact of COVID-19 pandemic. In 2019-20, the Indian economy grew by 4.2% against 6.1% expansion in 2018-19. Also, the output of eight core infrastructure industries plunged by a record 38.1% in April as the nationwide lockdown to contain coronavirus pandemic caused a substantial loss of production across sectors. The production of coal, natural gas, refinery products, steel, cement and electricity contracted in double digits in the month. Banking stocks will be in focus with the RBI’s data showing that bank credit shrank 1.2% across sectors - agriculture, industry, services, and retail - on a monthly basis in April, which was the first full month of the nationwide lockdown to contain the spread of coronavirus. There will be some reaction in sugar stocks with the Union food ministry’s statement that cane dues to be paid by sugar mills to farmers have reached Rs 17,134 crore so far in the 2019-20 season that will end in September.

The US markets ended mostly higher on Friday as traders reacted positively to President Donald Trump's highly anticipated press conference about China. Asian markets are trading in green on Monday as a Chinese data release over the weekend showed the country’s factory activity expanding in May.

Back home, in a highly volatile session, Indian equity benchmarks traded between green and red for most part of the day and finally managed to close Friday’s session on higher note, despite weak cues from global markets. With that, markets took winning run to third day, recapturing their crucial 9,550 (Nifty) and 32,400 (Sensex) bastions. Key indices made a negative start, as traders were on sidelines ahead of release of official gross domestic product (GDP) data for the January-March period due later in the day. Some pessimism also came with Care ratings stating that the country's GDP growth is likely to be at 3.6% in January-March 2020 as economic activity came to a complete halt due to the countrywide lockdown imposed to contain the coronavirus outbreak.  Market participants also got cautious after Union Minister Nitin Gadkari said there is a need to decongest the financial capital as the densely populated city is facing 'disastrous consequences', referring to mounting coronavirus cases. However, markets reversed trend and traded higher by the last hour of trade, as traders found some support with Commerce and Industry Minister Piyush Goyal’s statement that India's exports will improve in May compared to April when shipments contracted by a record 60.28%. Additional support also came as the Department for Promotion of Industry and Internal Trade (DPIIT) in its latest data showed that foreign direct investment (FDI) in India rose by 13 percent - the sharpest pace in the last four fiscals - to a record of $49.97 billion in the financial year 2019-20 (FY20). Finally, the BSE Sensex gained 223.51 points or 0.69% to 32,424.10, while the CNX Nifty was up by 90.20 points or 0.95% to 9,580.30.