Markets to get pessimistic start on Monday

Indian markets ended sharply lower on Friday after a selloff on Wall Street rippled across the Asian markets, with almost all major sector indices trading lower. Today, the start of new week is likely to be pessimistic amid weakness in global markets. There will be some cautiousness as investors are likely to watch developments with respect to the India-China border issue. Rising coronavirus cases in the country may also dampen the sentiments in the markets. India, which is the worst-hit nation after the US, recorded its highest single-day spike of 91,723 coronavirus cases on Monday. The total number of coronavirus cases in the country now stand at 4,202,562. Traders may take note of Industry body FICCI’s statement that the recent rise in smuggling in the northeastern region can be attributed to economic distress insinuated by Covid-19 pandemic. However, some respite may come later in the day with the finance ministry’s statement that the country is witnessing a V-shaped economic recovery. Besides, Finance Minister Nirmala Sitharaman said India’s commitment to reform is being taken seriously by foreign investors, which is evident from the good inflow of FDI even during the time of COVID-19. Between April-July, the Foreign Direct Investment (FDI) into India stood at $20 billion. Some support may come as the Reserve Bank came up with revised long format audit report (LFAR) norms with a view to improving efficacy of internal audit and risk management systems. Also, Commerce and Industry Minister Piyush Goyal has said the country’s exports as well as imports are showing positive trends as the outbound shipments are approaching the last year's levels, after making a sharp dip in April this year due to the Covid-19 pandemic. Auto stocks will be in focus with the Society of Indian Automobile Manufacturers (SIAM) report that the commercial vehicle industry, which is facing challenging times, is expected to take at least 1-2 years to get back to the 2018-19 sales volume level when the industry crossed the one million sales mark. Select banking stocks will be in limelight as ratings agency Moody's took rating action on five public sector banks, namely, Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank and Union Bank of India. Meanwhile, the IPO of Happiest Minds Technologies to open for subscription on September 07 and closes on September 09. The price band of the offer has been fixed at Rs 165 to Rs 166 per equity share.

The US markets settled in red on Friday with tech stocks taking the brunt of the pain for a second consecutive day. Asian markets are trading mostly lower on Monday as tech tensions between Washington and Beijing escalate.

Back home, Indian equity benchmarks finished lower for the second consecutive session on Friday, dragged by Metal, Financial and Power stocks amid a sell-off in global equities. Markets made pessimistic start and stayed in red terrain for whole day, as traders remained cautious with domestic rating agency ICRA’s report that corporate revenues declined by 31 per cent in the first quarter of current financial year (Q1FY21), but profit margins decreased by a lesser degree to 3.6 per cent in the April-June period. It analysed that financial results of 489 companies to arrive at the conclusion. It can be noted that the GDP of the country contracted by 23.9 per cent during the quarter, which had witnessed total lockdown of the country for the first two months to contain the spread of the coronavirus infections. The market participants failed to take support with Union Minister of Commerce and Industry Piyush Goyal’s statement that exports as well as imports are showing positive trends. He said that the exports are approaching the last year’s levels, after making a sharp dip in April this year due to pandemic. Meanwhile, Finance Minister Nirmala Sitharaman has asked banks and NBFCs to roll out loan restructuring scheme for COVID-19 related stress by September 15 and provide adequate support to the borrowers following the lifting of moratorium on repayment of debts. Finally, the BSE Sensex fell 633.76 points or 1.63% to 38,357.18, while the CNX Nifty was down by 193.60 points or 1.68% to 11,333.85.