Markets likely to open in green on Friday

Indian equity benchmarks failed to hold gains on Thursday and finally ended the trading session marginally higher. Today, markets are likely to open in green amid positive trend from Asian peers. Support may come 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.’ Meanwhile, Principal Scientific Adviser K Vijay Raghavan said for achieving Aatmanirbharata (self-reliance) in the area of defence, it is necessary to achieve self-sufficiency in other areas, and also map core capabilities and efficiencies in the country. However, Finance Minister Nirmala Sitharaman after the 41st meeting of the GST Council said the economy is facing an extraordinary Act of God situation, which may result in economic contraction. The Centre placed before the GST Council two options for borrowing by states to meet the shortfall in GST revenues, pegged at Rs 2.35 lakh crore in the current fiscal. As per the Centre’s calculation, the compensation requirement by the states in the current fiscal would be Rs 3 lakh crore, of which Rs 65,000 crore is expected to be met from the cess levied in the GST regime. Hence, the total shortfall is estimated at Rs 2.35 lakh crore. Traders may take note of report that the Centre for Monitoring Indian Economy said Younger workforce in the age group of 25-29 years has seen the highest number of job losses during the pandemic while fresh recruitments in this category is low, indicating lower demand for new labour and inability of the enterprises to hire and train fresh recruits during this time. There will be some buzz in oil stocks on private report said that India’s oil-product demand is set to slump to a five-year low this financial year, with a bleak outlook for diesel consumption as the nation’s truck operators idle vehicles and consider cutting the size of their fleets. There will be some reaction in agriculture sector related stocks with private report stating that the indispensability of the agriculture sector in the country has been brought to focus by the Covid-19 pandemic and it remained the silver lining for 2020-21.

The US markets ended a choppy session mostly higher on Thursday after Federal Reserve Chairman Jerome Powell said policy makers would no longer pre-emptively hike interest rates to stave off inflation. Asian markets are trading mostly higher in early deals on Friday following positive cues from US markets.

Back home, Indian equity benchmarks gave up most of the day's gains to end mildly higher on Thursday, as global equities took a breather after recent gains ahead of the US central bank chief’s speech. It was the fifth straight session of gains for the key indices. Markets showcased a strong opening, as traders took some encouragement with Commerce Secretary Anup Wadhawan’s statement that the department of commerce is proactively engaging with state governments to promote exports. He also requested state governments to extend their support to take forward the initiatives to boost country's outbound shipments. Traders also took note of report that the Reserve Bank of India (RBI) will rationalise regulations for overseas direct investment (ODI) in order to make them simpler and more principles-based. The headline indices held onto gains in afternoon session, taking support from Governor Shaktikanta Das’ statement that while the Reserve Bank of India’s moratorium on repaying loans was a temporary solution in the context of COVID-19 lockdown, the resolution framework is expected to give a durable relief to borrowers facing the pandemic-related stress. However, Indian shares eked out most of day's gain in late hour of trading session, as traders got anxious with SBI Research report that disposable income growth of households fell to 0.8 times in fiscal 2019-20 as compared to an average growth of 2.3 times in the preceding six fiscals. Some pessimism also came with former Finance Secretary S C Garg stating that the RBI transferred only 44 percent of its surplus or income to the government, which is the lowest in percentage terms in the last seven years. Earlier, the RBI board approved a surplus transfer of Rs 57,128 crore to the central government for Accounting Year 2019-20 (July-June). Finally, the BSE Sensex rose 39.55 points or 0.10% to 39,113.47, while the CNX Nifty was up by 9.65 points or 0.08% to 11,559.25.