Markets to get optimistic start of new week; GDP data eyed

Indian markets ended higher for the sixth consecutive session on Friday lifted by gains in financial stocks. Today, the markets are likely to get an optimistic start of new week following positive global cues. Investors will be eyeing the June quarter GDP data which will be released by the National Statistical Office later in the day. Traders will be getting encouragement with report that the Ministry of Home Affairs (MHA) has issued new guidelines for opening up of more activities in areas outside the Containment Zones. In Unlock 4, which will come into effect from September 1, 2020, the process of phased re-opening of activities has been extended further. Under the new guidelines, states are not to impose any local lockdown (State/ District/ sub-division/City/ village level), outside the containment zones, without prior consultation with the central government. Some support will come with Public Enterprises Selection Board (PESB) chairman Rajiv Kumar’s statement that central public sector enterprises, which have a combined net worth of close to Rs 12 lakh crore, can boost India's GDP by 2-3 percent by leveraging funds and stepping up capital expenditure. However, rising coronavirus cases in the country may keep upside in check. India has recorded its worst-ever single-day spike of 79,457 new coronavirus cases, taking its total caseload to 3,619,169. Traders may be concerned with private report that India's fiscal deficit is expected to touch 7 per cent of GDP in 2020-21 fiscal as against budget estimate of 3.5 per cent, with revenue collections being hit amid disruptions in economic activities due to lockdowns. There may be some cautiousness with Reserve Bank of India’s (RBI) analysis of listed non-government non-financial (NGNF) companies showing that operating profits of manufacturing firms declined in the January-March quarter of 2019-20 on account of lower sales. Banking stocks will be buzzing with the RBI’s data showing that bank credit grew 5.52 per cent to Rs 102.19 trillion and deposits increased 11.04 per cent to Rs 140.80 trillion in the fortnight ended August 14. In the year-ago period, bank credit stood at Rs 96.84 trillion and deposit at Rs 126.8 trillion, respectively. Telecom stocks will be in focus as Cellular Operators' Association of India (COAI) said that telecom industry's revenues are expected to rise 14-15 per cent in the current financial year led by some uptick in average revenue per user, though the subscriber base may remain flat with rural growth offsetting SIM consolidation in urban locations.

The US markets ended higher on Friday amid optimism about the economic recovery following the coronavirus crisis. Asian markets are trading mostly in green on Monday as investors wagered monetary and fiscal policies globally would stay super stimulatory for a protracted period, keeping the safe-haven dollar on the defensive.

Back home, extending their winning run for the sixth session, Indian equity benchmarks ended Friday’s session on higher note, led by gains in index-heavyweights Indusind Bank, Axis Bank and ICICI Bank amid persistent foreign fund inflow. Markets showcased a positive opening and stayed in green for whole day, as RBI Governor Shaktikanta Das appreciated the government’s response to the COVID-19 crisis as being fiscally very prudent and very calibrated.  He said I cannot speak for the government. But I just want to say that in the central bank, as observers of what is happening in the country in the fiscal policy, I think the government’s response has been very prudent and very calibrated. Traders took some respite with Commerce and Industry Minister Piyush Goyal’s statement that business communities of India and ASEAN (Association of Southeast Asian Nations) should work to resolve their differences, work to create a more valuable and trusted regional value chains, remove the non-tariff barriers on both sides, ensure sanctity of rules of origin, and open markets to expand two-way trade. Market mood remained energetic in late afternoon deals, taking support from Fitch Ratings’ report stating that a surge in gold prices since the start of coronavirus pandemic has helped to support higher loan growth by some Indian non-bank financial institutions (NBFIs) that lend against the metal, a move that will bolster their interest income but the trend also raises potential risks associated with a fall in gold prices. Market participants also took a note of Niti Aayog CEO Amitabh Kant’s statement that India's urban population will grow rapidly by 2050, so new urbanization should be done on the back of sustainable development. He also said that cities in India are at a stage of massive development with a growing economy, regional linkages, and a vibrant environment. A sharp appreciation in the rupee also helped in building positive sentiments. The domestic currency strengthened 42 paise to end at 73.39 against the US dollar. Finally, the BSE Sensex rose 353.84 points or 0.90% to 39,467.31, while the CNX Nifty was up by 88.35 points or 0.76% to 11,647.60.