Benchmarks to make pessimistic start on Thursday

Indian markets ended notably higher on Wednesday, after Fitch Ratings said that Indian economy will likely bounce back with a sharp growth rate of 9.5 percent in next fiscal. Today, the markets are likely to make pessimistic start tracking weakness in the global markets. Traders will be concerned with rising coronavirus cases in India. The total number of coronavirus cases in the country jumped to 2,87,155, while 8,107 people have died from the disease so far, according to Worldometer. Besides, the Organization for Economic Co-operation and Development (OECD) has projected that India’s economy will contract 7.3 per cent in the current fiscal year if there is a second wave of the coronavirus (Covid-19) later this year. This is so far the steepest contraction that any agency has predicted for the country. There will be some cautiousness a private report that India consumer price inflation is likely to have moderated to a six-month low in May on a softer rise in food prices as supply disruptions eased after businesses reopened from the coronavirus lockdown in many parts of the country. Though, some respite may come later in the day with report that the Finance Ministry released the third monthly installment of Rs 6,195 crore to 14 states as of Post Devolution Revenue Deficit Grant to provide additional resources during COVID-19 crisis. Some support may also come as global rating agency S&P Global Ratings affirmed BBB- long-term and A-3 short-term unsolicited foreign and local currency sovereign credit ratings on India, dispelling fears that a rating downgrade is on the cards. The agency said the outlook on the long-term rating is stable. Meanwhile, the government has for the third time extended the validity of e-way bills generated on or before March 24 till June 30. There will be some buzz in the gas sector stocks with a report by the International Energy Agency (IEA) on the gas sector for the year 2020 stating that India is set to emerge as one of the primary drivers of growth in gas demand in Asia, after a temporary slowdown in 2020. Telecom stocks will be in focus as the Supreme Court will hear the AGR matter later in the day.

The US markets ended mostly lower on Wednesday after the Fed indicated interest rates are likely to remain at current near-zero levels through 2022. Asian markets are trading mostly in red on Thursday after the dovish commentary from the US Federal Reserve.

Back home, Indian equity benchmarks were struggling with extreme volatility but ended Wednesday’s session on optimistic note with gains of over half percent, amid buying across sectors led by financial shares, as hopes of economic reopening and a generally improved global risk sentiment outweighed concerns over the surge in domestic COVID-19 infections. Domestic bourses made positive start and stayed in green for whole day, tracking gains in Asian equities. Traders took encouragement with the Department for Promotion of Industry and Internal Trade’ (DPIIT) data showing that Cayman Islands has emerged as the fifth largest investor in India, with foreign direct investment (FDI) from the nation increasing over three-fold to $3.7 billion in 2019-20. Buying further crept in as the Ministry of Corporate Affairs (MCA) amended the Companies (Share Capital and Debentures) Rules, 2014, to allow startups to issue sweat equity shares not exceeding 50% of its paid-up capital up for a decade after the registration of the firm. However, volatility struck bourses in afternoon session, as traders got wary with private report stating that consumer behaviour in India is radically changing due to COVID-19 with 60 percent of buyers in the country believing that the pandemic would alter the way they shop. However, markets gained traction in final hour of trade, as the sentiment got a boost after Fitch Ratings said that after a contraction in the current financial year, India's economy is forecast to bounce back with a sharp growth rate of 9.5 percent next year, provided it avoids further deterioration in financial sector health. Finally, the BSE Sensex gained 290.36 points or 0.86% to 34,247.05, while the CNX Nifty was up by 69.50 points or 0.69% to 10,116.15.