Benchmarks to make slightly positive start

Indian markets ended lower after a volatile session on Thursday, following a more than 1,000-point rally in the last six sessions led by losses in financials. Today, the markets are likely to make slightly positive start following positive cues from Asian peers. Traders will be getting some encouragement with the government data showing that the country’s job situation registered an improvement during 2018-19 with unemployment rate declining to 5.8 per cent, down from 6.1 per cent in the previous financial year. Some support will also come with Crisil Research report that even as coronavirus pandemic has impacted many sectors, the agriculture could be the only bright spot as real agriculture is likely to witness a 2.5 percent growth in 2020-21. Though, there may be some cautiousness with report that the total number of coronavirus cases in India has risen to 226,713 and 6,363 have died from the fatal disease. Traders may be concerned with surveys released by the Reserve Bank showing that consumer confidence has collapsed amid the coronavirus pandemic and it may result in contraction of the economy by 1.5 per cent during 2020-21. Meanwhile, the Centre has released Rs 36,400 crore as Goods & Services Tax (GST) compensation to states for the period December 2019 to February. This comes at a time when the resources of various state governments have taken a hit due to the novel coronavirus, or COVID-19, pandemic. There will be some buzz in the steel stocks as the government extended anti-dumping duty on certain variety of steel products till December 4 this year with a view to guard domestic manufacturers from cheap imports coming from China, Malaysia and Korea. Banking stocks will be in focus with ICRA’s report that gross non-performing assets (NPAs) of banks are likely to worsen to 11.3-11.6 percent by the end of this financial year from 8.6 percent as of March 2020, due to disruptions caused by the coronavirus pandemic. There will be some reaction in construction sector stocks with Crisil’s report that investment in Indian construction industry is likely to witness a 12-16% decline to nearly Rs 7.3 lakh crore during the current fiscal year, as COVID-19 pandemic has severely impacted the economy and liquidity scenario.

The US markets ended mostly lower on Thursday ahead of the release of the Labor Department's closely watched monthly jobs report on June 05. Asian markets are trading mostly higher on Friday amid hopes about a global economic recovery.

Back home, snapping 6-day gaining streak, Indian equity benchmarks ended Thursday’s session in red terrain, as investors remained anxious about rising number of coronavirus cases and its impact on the global as well as domestic economy. Markets made slightly positive start, tracking positive global shares. Traders also took some support with Union minister Prakash Javdekar’s statement that the government has formed an empowered group of secretaries to enhance investment in the country to offset the impact of coronavirus. However, key indices failed to hold on to gains and slipped into red terrain, as traders turned wary with Moody's Investors Service stating that the quality of retail and small business loans will deteriorate, which account of 44 per cent of the total loans. Elaborating on the key drivers behind India's sovereign downgrade, it said that the risks to the financial system are rising. Markets extended their losses in afternoon session, as former chief economic adviser Arvind Subramanian said the FRBM Act will probably have to be revised by the end of the year as India will witness a sharp decline in GDP growth due to the COVID-19 crisis. Subramanian further said while labor reforms were necessary, the way they have been done by some states has undermined basic protections to workers, especially in light of the migrant crisis. However, domestic bourses managed to pare most of losses in final hour of session as the Confederation of Indian Industry (CII) has laid out a 10-point roadmap to revive growth and navigate the challenges of loss of lives and livelihoods posed by the global pandemic COVID-19 that has forced countries across the world to reset their growth paths. Finally, the BSE Sensex lost 128.84 points or 0.38% to 33,980.70, while the CNX Nifty was down by 32.45 points or 0.32% to 10,029.10.