Domestic markets likely to get pessimistic start

Indian markets ended higher on Thursday led by gains in financials and index heavyweight Reliance Industries. Today, the start of session is likely to be pessimistic following sell-off in the global markets coupled with rising coronavirus cases in the country. India has seen its biggest daily spurt in the number of coronavirus cases, with over 48,000 new infections being reported in a span of 24 hours. The total now stands at 1,288,130. Traders will be concerned with Economic Affairs Secretary Tarun Bajaj’s statement that the government is unlikely to meet the Budget targets for 2020-21 due to the COVID-19 crisis but contraction in economic growth may not be as severe as being pointed out by the outside world. However, some respite may come later in the day with Finance Secretary Ajay Bhushan Pandey’s statement that tax mop up in first quarter of the current fiscal is very encouraging and indicates that the economy is recovering sooner than what was anticipated at the time of imposition of lockdown. Some support may also come as IHS Markit expects the Indian economy to rebound in the second half of 2020 as the impact of the COVID-19 pandemic subsides, and predicts 6.7% growth in the next financial year. Market participants may take note of Finance Ministry’s statement that the government is working on offering production linked incentives for up to five sectors to boost domestic manufacturing. Power stocks were in focus with a private report that power demand is expected to decline by around 8% in current fiscal due to the steep fall in demand from commercial and industrial segments on the back of Covid-19 pandemic-induced nationwide lockdown. There will be some reaction in sugar stocks with ICRA’s report that the domestic sugar production is likely to go up by 12% to 30.5 MT during the sugar year 2021, beginning October, due to availability of sugarcane in Maharashtra and Karnataka. There will be some result announcements to keep the markets in action.

The US markets settled sharply lower on Thursday as investors fled tech shares amid worsening pandemic, higher US jobless claims and mixed corporate earnings. Asian markets are trading mostly in red on Friday amid tensions between the US and China and an overnight fall in US markets.

Back home, Indian equity benchmarks ended Thursday’s session with a gain of over half a percent, on the back of sustained buying by participants. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 11,200 (Nifty) and 38,100 (Sensex) bastions. After muted start, key indices gained some traction and managed to keep their heads above water, as traders took some support from Chief Economic Adviser (CEA) K V Subramanian’s statement that the government may announce more fiscal measures to boost demand once the uncertainty related to Coronavirus disease (COVID-19) pandemic wanes. Buying further crept in as calling for more investment in India, Prime Minister Narendra Modi said India is emerging as a land of opportunities. He added that stronger domestic economic capacities can ensure global resilience against external shocks. Markets extended their gains in late afternoon session, as traders remained optimistic with Niti Aayog CEO Amitabh Kant’s statement that India will witness huge growth in digital lending as the COVID-19 pandemic has increased the acceptance of digital payments. Investors didn’t give any heed to a private report forecasts deeper distress for India which will lead to a 6 per cent growth contraction in FY21, citing the yet to be stabilised infection curve and the COVID-19 caseload in economically key states. According to the report, just 7 percent of the districts in economically key states of Maharashtra, Tamil Nadu and Gujarat, accounting for 30.5 percent of the national economic output, and in Karnataka and Andhra Pradesh account for as much as 70 percent of the caseload. Finally, the BSE Sensex gained 268.95 points or 0.71% to 38,140.47, while the CNX Nifty was up by 82.85 points or 0.74% to 11,215.45.