Benchmarks to make optimistic start of new week

Indian markets ended higher with notable gains on Friday, in line with key Asian equities, amid heavy buying in metal, media and banking scrips. Today, the markets are likely to make optimistic start of new week following firm global cues. Besides, the reopening of hotels, restaurants, malls, and places of worship from June 08 after 75 days of lockdown may also aid sentiment. Some support will come with report that foreign portfolio investors have pumped in a massive Rs 18,589 crore into the Indian markets the first week of June as sentiment improved amid graded lifting of lockdown curbs. Also, the Reserve Bank of India (RBI) said the country's foreign exchange reserves surged $3.43 billion to a fresh all-time high of $493.48 billion for the week ended May 29 on a handsome accretion of the core currency assets. Besides, the government of India has effectively suspended fresh bankruptcy proceedings against persons impacted because of COVID-19 for at least six months, up to a maximum of one year. Though, the continuous rise in the Covid-19 cases may dampen the sentiment in the markets. India has registered over 10,500 new coronavirus cases in a single day, taking its spot as the 5th worst-hit nation across the global. Traders may be concerned with the Income Tax Department’s statement that the actual gross direct tax collection during 2019-20 fiscal dipped by 4.92% to Rs 12.33 trillion on account on reduction in corporate tax rate, increased standard deduction and personal I-T exemption limit. Meanwhile, traders will be looking ahead to the GST Council meeting which is scheduled on June 12 and likely to discuss the impact of the COVID-19 pandemic on tax revenues. There will be some buzz in the banking stocks with the RBI’s data showing that bank credit and deposits grew 6.25% and 10.64% YoY to Rs 102.23 lakh crore and Rs 138.30 lakh crore, respectively, in the fortnight ended May 22. Power stocks will be in focus with CRISIL Ratings’ report that power distribution utilities' debt will hit an all-time high of Rs 4.5 lakh crore by the end of the ongoing financial year. There will be some reaction in coal stocks with a private report that the country's coal import dropped by 20 percent to 18.93 million tonnes (MT) in May.

The US markets ended higher on Friday following the release of a Labor Department report showing an unexpected jump in employment in the month of May. Asian markets are trading in green on Monday after US jobs data released Friday had an unexpected jump, spurring hopes of an economic recovery from the coronavirus pandemic.

Back home, in a volatile session, Indian equity benchmarks traded in green throughout the day and ended on higher note on Friday, following positive global shares along with optimism over the easing of lockdown measures offset fears over rising cases of the coronavirus in the country. The markets had opened in the green, but soon pared most gains, as the 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. However, key gauges once again started upwards trend in late morning session, as traders took 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. Buying got intensified in the final hour of session, taking support from 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. Sentiments remained positive as Union Minister for MSME and Road Transport and Highways Nitin Gadkari has said that foreign direct investment (FDI) can be explored in non-banking financial companies (NBFCs), in order to strengthen NBFCs for extending support to MSMEs. He said strengthening of NBFCs, state cooperative banks, district cooperative banks, credit societies etc is required to extend support to MSMEs during this challenging time. Finally, the BSE Sensex gained 306.54 points or 0.90% to 34,287.24, while the CNX Nifty was up by 113.05 points or 1.13% to 10,142.15.