Markets likely to get positive start on Friday

Indian markets ended lower on Thursday amid mixed global cues and the expiry of July series derivative contracts. Today, the markets are likely to get positive start amid mixed Asian cues. Traders will be getting encouragement as trade body CII said the new set of relaxations introduced while extending the lockdown till August 31 in Tamil Nadu would pave way for quick revival of the economy besides ensuring livelihood of people. Some support will also come with Commerce and Industry Minister Piyush Goyal’s statement that the government is working on production-linked incentives for 12 major sectors like Active Pharmaceutical Ingredients and electronics. Traders may take note of former RBI Governor Raghuram Rajan’s statement bold government reform that triggers animal spirits and implemented effectively is essential for India to come out of the Covid-19 setbacks. Besides, Prime Minister Narendra Modi held a brainstorming session with financial sector regulators and discussed various measures to revive the economy hit hard by Covid-19 crisis. Though, some cautiousness may be there with report that India has recorded worst-ever spike of over 54,900 coronavirus cases, taking its tally to 1,639,350. With this, India has recorded over 100,000 cases in just 48 hours. The country's death toll now stands at 35,786. It has overtaken Italy to have the fifth-most deaths due to coronavirus. Gold related stocks will be in focus with WGC’s report that demand of gold in India declined 70.12% during the April-June quarter of 2020 to 63.7 tonnes over last year amid nationwide lockdown to prevent the spread of COVID-19. Also, there will be lost of earnings based reactions to keep markets buzzing.

The US markets ended mostly lower on Thursday after US economy recorded a worst quarterly plunge ever of 33 per cent annualized rate in the June quarter. Asian markets are trading mixed on Friday amid weakness on Wall Street overnight.

Back home, Indian equity benchmarks erased early gains to end lower for the second straight session on Thursday, tracking weak cues from global markets and record rise in Covid-19 cases. The start of the markets was on a promising note, as traders took encouragement with the International Monetary Fund’s (IMF) statement that the stimulus measures taken by India are substantial, but there is more scope for such measures even after considering the limited fiscal space. Traders took note of report that the Ministry of Home Affairs (MHA) issued new guidelines for opening up of more activities in areas outside containment zones, as a part of Unlock 3.0, which will come into effect from August 1. The process of phased re-opening of activities has been extended further. Sentiment remained upbeat with Niti Aayog’s draft paper titled 'Towards Responsible AI For All' stated that the government is likely to fund specific research projects in responsible Artificial Intelligence (AI) and introduce ethics of AI into the university curriculum as the new-age technology is expected to boost India's annual growth rate by 1.3 per cent by 2035. But, markets lost momentum and turned negative in the second half of the session, as domestic traders got cautious about former RBI deputy governor Viral Acharya’s statement the suspension of the bankruptcy code for a whole year could be a potential problem for the country. Some weakness also came as Federal Reserve expressed concern that the viral outbreak will act as a drag on the economy and hiring in coming months and that it plans to keep its benchmark short-term interest rate pegged near zero. Adding some worries on the street, Moody's Investors Service said that the Reserve Bank of India's recent financial stability report and results of banking system stress tests show that banks' gross non-performing assets will rise meaningfully under all four stress test scenarios with their common equity tier one ratio declining by one to two percentage points. Finally, the BSE Sensex lost 335.06 points or 0.88% to 37,736.07, while the CNX Nifty was down by 100.70 points or 0.90% to 11,102.15.