Markets likely to get flat-to-negative start amid weakness in Asian peers

Indian markets ended off day's high but in the green, rising for a third straight session on Thursday. Gains in metals and IT stocks were capped by losses in banks and financials. Today, the markets are likely to get flat-to-negative start amid weakness in Asian peers coupled with rising coronavirus cases in the country. Breaking all records, India has recorded a massive surge of 131,893 Covid-19 cases in the last 24 hours. With this, India's tally now stands at 13,057,954, Worldometer showed. Active cases are nearing the 1-million mark. India is now the 4th-worst hit country in terms of active cases. However, some support may come later in the day with Crisil Ratings’ report that after eight quarters of either decline or single-digit growth, corporate revenue grew in high double-digits of 15-17 per cent in the March quarter of FY21 to Rs 6.9 lakh crore, partly because of the low base and better realisation due to higher commodity prices, pushing up their operating profits by a much higher 28-30 per cent. Traders may take note of report that Finance minister Nirmala Sitharaman has pitched for an extension of the Debt Service Suspension Initiative (DSSI) by six months through December 2021 to continue support to vulnerable economies in the wake of the Covid-19 crisis. Meanwhile, the Reserve Bank of India (RBI) announced that it will conduct open market purchase of government securities of Rs one lakh crore under the G-sec Acquisition Programme (G-SAP 1.0) in Q1 2021-22 with a view to enabling a stable and orderly evolution of the yield curve. Aviation stocks will be in focus as the International Air Transport Association (IATA) said the total demand for air travel in February measured in revenue passenger kilometres was down 74.7 per cent compared to February 2019. There will be some reaction in NBFCs stocks as rating agencies Icra, Fitch and its domestic affiliate India Ratings (Ind-Ra), said that the recent spike in Covid-19 cases and associated lockdowns, though localised, could adversely impact non-banking companies (NBFCs). It could also act as a dampener for the securitisation market, affecting fund-raising for NBFCs in the near term and may delay recovery in the sector. Auto stocks will be in limelight with the latest vehicle registration data released by the Federation of Automobile Dealers Associations (FADA) showing that retail automobile sales during March 2021 fell sharply by 28.64 percent as compared to the same month last year.

The US markets ended higher on Thursday helped to a new high by large technology companies that benefitted from lower bond yields. Asian markets are trading mostly in red on Friday even after technology stocks lifted the S&P 500 to a new record.

Back home, Indian equity benchmarks wiped off most of their intraday gains but managed to end Thursday’s session marginally in green, paced by gains in metal, basic materials, consumer durables and industrials shares. The benchmarks opened higher and extended gains in noon deals, taking support from Chief Economist of the International Monetary Fund (IMF) Gita Gopinath’s statement that the Reserve Bank of India (RBI)’s quantitative easing measures are a welcome move. Gopinath also said that this fiscal stance is also appropriate for India overall and that it is good that support isn’t being pulled back. She added there is evidence of normalisation of economic activities in India. Sentiments remained up-beat with report stating that growth is of paramount importance now the Reserve Bank of India said it will do whatever it takes to sustain the fledgling recovery by ensuring ample and assured liquidity and cheaper funds to oil the wheels of the economy. Investors remained optimistic with the corporate affairs ministry stating that the latest amendments to the insolvency law by way of an ordinance are aimed at providing an efficient alternative resolution framework for Micro, Small and Medium Enterprises (MSMEs). Pre-packaged insolvency resolution process has been introduced for stressed MSMEs. However, selling pressure in power, utilities and banking shares in the last hour of trade led to indices come off intraday highs. Concerns over rising coronavirus infections and resultant restrictions across the country also kept investors on the edge. Traders also got anxious with Fitch Ratings’ statement that India's non-bank financial institutions (NBFIs) face renewed asset quality and liquidity risks amid the second wave of coronavirus infections. These challenges are likely to increase if recent restrictions to contain the pandemic are expanded or prolonged, leading to greater economic and operational disruption. Meanwhile, the Reserve Bank of India announced an extension of interim ways and means advances (WMAs) limit of Rs 51,560 crore to state governments till September, to help them tide over the financial stress posed by the second wave of COVID-19. Finally, the BSE Sensex rose 84.45 points or 0.17% to 49,746.21, while the CNX Nifty was up by 54.75 points or 0.37% to 14,873.80.