Markets to make positive start on Tuesday

Indian markets ended higher on Monday, with gains in rupee on the back of sustained foreign fund flows and hopes for a revival of economic activity helping underpin investors’ sentiment. Today, the markets are likely to make positive start tracking global markets. Some support will come as the Reserve Bank of India proposed a comprehensive framework for sale of loan exposures, which could be standard, sub-standard or non-performing assets (NPAs), as part of the overall exercise to deepen the market for lending. Traders may take note that Finance Minister Nirmala Sitharaman said the government will consider an extension in the deadline for availing the lower 15 percent corporate tax rate on new investments, due to the COVID-19 pandemic. Though, there may be some cautiousness with rising corona virus cases in India. The total number of coronavirus cases in the country has jumped to 265,928, while 7,473 people have died from the disease so far. Traders may be concerned with the World Bank’s statement that India's economy will shrink by 3.2 percent in the current fiscal, as it joined a chorus of international agencies that are forecasting a contraction in growth rate due to the coronavirus lockdown halting economic activity. It said that the COVID-19 pandemic and the multi-phased lockdown imposed to curb its spread has resulted in a devastating blow to the Indian economy. Also, there may be some anxiety as S&P Global Ratings said Indian economy will shrink 5 per cent in the current fiscal, saying the fiscal stimulus worth 1.2 per cent of GDP will not be enough to provide significant growth support. Meanwhile, Markets regulator Sebi has eased the compliance norms for companies seeking to list their debt securities such as non-convertible debentures (NCDs) and commercial papers. Public sector banks will be in focus as FM Nirmala Sitharaman will meet the chiefs of all state-owned banks and the chairman of SIDBI on June 09 to review the flow of credit after the opening up of the economy. She will take stock of the Emergency Credit Line Guarantee Scheme announced recently. There will be some reaction in sugar stocks with Food Minister Ram Vilas Paswan’s statement that cane arrears to farmers have reached around Rs 22,000 crore for the current season, and asked mills to clear it soon to improve farmers' cash flow situation amid the coronavirus pandemic.

The US markets ended sharply higher on Monday as traders remain optimistic about a quick economic recovery as businesses begin to reopen following the coronavirus lockdown. Asian markets are trading mostly in green on Tuesday following overnight rally on Wall Street.

Back home, Indian equity benchmarks surrendered most of the day's gains but managed to end marginally in green on Monday, following positive cues from Asian peers. Trading for the day began on a higher note, as investors cheered the government's move to open places of worship, malls and restaurants. Traders took encouragement 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 sentiments 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. Some support also came as the government has modified public procurement norms to give maximum preference to companies whose goods and services have 50 per cent or more local content, a move aimed at promoting 'Make in India' and making the country self-reliant. The revised Public Procurement (Preference to Make in India), Order 2017, has introduced a concept of Class-I, II and non-local suppliers, based on which they will get preference in government purchases of goods and services. However, in late afternoon session, key indices gave up most of their gains to come off their intraday high points, as market-men got anxious with 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. Some pessimism also came with the private report that the prolonged period of growth slowdown is likely to adversely impact India's external sector which currently is comfortably placed on account of subdued prices of crude oil in the international market. Finally, the BSE Sensex gained 83.34 points or 0.24% to 34,370.58, while the CNX Nifty was up by 25.30 points or 0.25% to 10,167.45.