Benchmarks to make gap-down opening amid weak global cues

Indian markets ended sharply lower on Thursday on the back of weak global cues after the US Federal Reserve indicated that the US economy will shrink 6.5 per cent in 2020. Today, the markets are likely to make gap-down opening following a mammoth plunge on the Wall Street coupled with rising coronavirus cases in India. With over 10,000 cases in a day, India has taken over the UK as the fourth-most-affected nation by number of coronavirus cases. The country's count of people infected by the highly contagious virus now stands at 298,283, according to data compiled by Worldometer. India's death toll has also seen a sharp spike, with 390 fatalities being registered in a single day taking the total to 8,500. Market participants will keep a keen eye on industrial production data for April and CPI inflation for May which are due later in the day. Investors will be eyeing the 40th meeting of the GST Council, headed by Finance Minister Nirmala Sitharaman and comprising state counterparts, to be held later in the day. The GST Council is likely to discuss the impact of COVID-19 on tax revenues and may decide on the framework for compensation payout to states. There will be some cautiousness with United Nations Conference on Trade and Development’s (UNCTAD) statement that the value of international trade in goods declined around 5% in the first quarter of 2020 and is expected to decline further by 27% in the ongoing quarter with trade in many developing countries projected to nosedive due to the unprecedented effects of the pandemic. However, some respite may come later in the day with Niti Aayog vice-chairman Rajiv Kumar’s statement that India's economy will recover after the containment of the COVID-19 pandemic and the country will maintain its sound net external position. Some support may also come with Commerce and Industry Minister Piyush Goyal’s statement that the country's exports are drastically improving with the outbound shipments contracting 36 percent in May as compared to 60 percent in April. There will be some buzz in the coal stocks as Prime Minister Narendra Modi will launch the auction of coal mines for commercial mining in the country on June 18. Telecom and banking stocks will be in focus as the Supreme Court termed as totally impermissible the demand by Department of Telecom (DoT) for dues of Rs 4 lakh crore in Adjusted Gross Revenue (AGR) from the public sector undertakings (PSUs) and said DoT must consider withdrawing it.

The US markets ended deeply in red on Thursday amid concerns about a second wave of coronavirus cases, as recent data has led to worries about economic reopening leading to a spike in infections. Asian markets are trading lower on Friday after an overnight plunge on Wall Street amid fears of a second wave resurgence of the coronavirus pandemic.

Back home, Thursday turned out to be a disappointing session for the Indian equity indices which got crushed by over two percent, on the back of weakness in global stocks along with rising COVID-19 cases in India. After a negative start, the domestic bourses never looked in recovery mood, as the Organization for Economic Co-operation and Development (OECD) projected that India’s economy will contract 7.3% 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. The sentiment was also weighed as global rating agency -- S&P Global Ratings has 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. It reflects India’s above-average real GDP growth, sound external profile, and evolving monetary settings. Markets extended their free fall in late afternoon session to end near day’s low, as traders remained anxious with Union minister Nitin Gadkari’s statement that India was expected to lose revenue of Rs 10 lakh crore due to the coronavirus crisis. He also said the situation was so grim that some states do not have money to pay salaries next month, and the country needs to tackle the crisis with positivity. Adding to the pain, ratings agency Fitch warned that concentration of ownership after delisting may create governance and key-man issues at the companies adopting such strategies. It noted that corporates can also simplify or reorganise complex group structures without the interference of minority shareholders through such moves. Finally, the BSE Sensex lost 708.68 points or 2.07% to 33,538.37, while the CNX Nifty was down by 214.15 points or 2.12% to 9,902.00.