Benchmarks to make negative start of new week

Indian markets ended considerably higher on Friday, with financials and information technology companies pacing the gainers on the back of positive global cues. Today, markets are likely to make negative start of new week following sell-off in the global markets coupled with continues rising coronavirus cases in the country. The Union Health Ministry said India recorded its biggest surge in the number of coronavirus cases in 24 hours for a second consecutive day with 19,906 new patients, taking the total to 5,28,859 infections. The country also witnessed 410 COVID-19-related deaths during the period, taking the total number of casualties due to the virus to 16,095. Also, traders will be concerned as S&P Global Ratings said that the Indian economy is in deep trouble with growth expected to contract by 5 percent in FY21. It added that difficulties in containing the virus, an anemic policy response, and underlying vulnerabilities, especially across the financial sector, are leading us to expect growth to fall this year before rebounding in 2021. Though, traders may take encouragement later in the day with Commerce and Industry Minister Piyush Goyal’s statement that adoption of technology and the digital economy would play a vital role in transforming business enterprises in the future and achieving the target of $5 trillion economy. Some support may come with the India Meteorological Department’s statement that the Southwest Monsoon has covered the entire country nearly two weeks ahead of its schedule. Besides, reversing the three-month selling streak in June, foreign portfolio investors (FPIs) pumped in a net Rs 21,235 crore in domestic markets amid increasing liquidity and gradual opening up of economy. There will be some buzz in the telecom stocks as Industry body COAI urged the government for urgent rationalisation of high burden of regulatory levies on telecom service providers (TSPs), including a cut in spectrum charges and licence fee, as it cited adverse impact of the Covid-19 pandemic on the sector. Aviation stocks will be in focus as the aviation regulator DGCA said it is extending the suspension of scheduled international passenger flights in the country till July 15 but added that some international scheduled services on selected routes may be permitted on a case to case basis. There will be some reaction in the housing finance companies (HFCs) stocks with rating agency ICRA’s statement that the asset quality of HFCs is likely to worsen, with severe economic disruptions impacting cash flows of borrowers.

The US markets closed sharply lower on Friday after Texas rolled back some of its reopening measures, raising concern about the latest spike in coronavirus cases and its impact on the economy. Asian markets are trading in red on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy.

Back home, Indian equity benchmarks traded with volatility, but in green terrain, throughout the day and ended Friday's session with gains of around a percent on the back of buying by participants amid positive cues from global markets. The benchmarks staged a gap up opening, as traders took encouragement from Union Commerce Minister Piyush Goyal’s statement that India is keen to focus on certain sectors where it has competitive advantage, emphasising that the country cannot afford to remain dependent on low cost, low quality products. Some support also came with a report stated that India and the US will restart high level negotiations on a trade pact in the coming days. However, volatility struck the markets in noon deals as they pared most of gains to come off intraday highs, as investors turned anxious with FIEO’s statement that the country's exports are likely to witness a 10-12% year-on-year decline during the ongoing fiscal, if the current trend persists, due to the contraction in global demand on account of the COVID-19 pandemic. Some concern also came with the US-India Business Council (USIBC) stating that the delay in clearance of shipments at customs would adversely affect the Make-In-India initiative, economic growth, and job creation amid increased vigilance at ports in view of border tension with China. But, key gauges strengthened once again in final hour of trade and settled near day’s high, taking support from report that Union Finance Minister Nirmala Sitharaman’s statement that the government was in talks with the Reserve Bank of India (RBI) for a one-time restructuring of loans to help companies which are under stressed due to the Covid-19 pandemic. Finally, the BSE Sensex gained 329.17 points or 0.94% to 35,171.27, while the CNX Nifty was up by 94.10 points or 0.91% to 10,383.00.