Markets likely to get gap-down opening; IIP, CPI data eyed

Indian markets ended lower on Friday dragged by losses in metals, private banks and auto stocks. Today, the start of holiday shortened week is likely to be gap-down amid weakness in Asian peers. Market participants will be eyeing in the macro-economic data -- consumer price index (CPI) and the Index of Industrial Production (IIP) -- to be out later in the day. Concerns over rising COVID-19 cases in the country and fears of lockdown in certain states may also weigh on market sentiment. Breaking all records, India has recorded a massive surge of 169,899 Covid-19 cases in the last 24 hours. Worldometer showed that with this, India has once again taken its spot as the second-worst hit nation with 13,525,364 cases in total. Maharashtra on Sunday reported over 63,000 new coronavirus cases in its highest ever single-day surge along with 349 deaths. There will be some cautiousness with report that foreign portfolio investors (FPIs) have withdrawn a net Rs 929 crore from Indian markets so far this month amid concerns over rising COVID-19 cases denting the economic recovery. However, some support may come later in the day as Finance Minister Nirmala Sitharaman urged the World Bank Group (WBG) to explore the possibility of sustaining crisis response keeping in mind debt sustainability of vulnerable countries. Traders may take note of report that Fitch Solutions sees RBI keeping benchmark interest rates unchanged during the fiscal to March 2022 following its decision to buy Rs 1 lakh crore of government bonds. Meanwhile, the government may hike foreign direct investment (FDI) limit in the pension sector to 74 percent and a Bill in this regard is expected to come in the next Parliament session. Pharma stocks will be in focus with report that Gilead has signed non-exclusive voluntary licensing agreements with pharma companies including Cipla, Dr Reddy’s Laboratories, Jubilant Lifesciences, Syngene, a Biocon company and Zydus Cadila Healthcare to manufacture remdesivir for distribution in 127 countries. There will be some reaction in telecom stocks as the Department of Telecommunications (DoT) is likely to issue guidelines on the implementation of production-linked incentive (PLI) schemes for manufacturers in the sector and start inviting applications for the same in about a week. Auto stocks will be in limelight with Icra’s report that the fresh restrictions imposed in Maharashtra to contain the second wave of COVID-19 are likely to impact the festive season auto sales, as Navaratri and Gudi Padwa are falling in April. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended higher on Friday after solid US inflation data and an uptick in Treasury yields suggested the economic recovery from the pandemic-related recession was gaining momentum. Asian markets are trading mostly in red on Monday as investors wait to see if US earnings can justify sky-high valuations, while bond markets could be tested by what should be very strong readings for US inflation and retail sales this week.

Back home, In a volatile session, Indian equity benchmarks snapped their three-day winning streak and ended with losses on Friday as the increase in new Covid-19 cases to unprecedented levels, raising the prospects of wider lockdown restrictions in the country, continued to batter investors' sentiment. The benchmarks opened lower amid largely negative cues from global markets. Some concern also came with ICRA Ratings’ report that an unabated increase in the COVID cases is likely to bring about fears of harsher lockdowns, which could impact the asset quality of retail loans especially for unsecured loans such as in the microfinance sector. It said this, in turn, would impact the fund-raising ability of the NBFCs and HFCs through securitisation of their assets. However, markets managed to trim all losses to trade in positive terrain in morning deals, taking support from 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. But, domestic equity markets once again entered into red terrain in late morning deals with continued selling pressure from metal, power and banking stocks. Traders overlooked Moody's Investors Service’s report that high-frequency alternative data indicates a strong rebound in economic activity even as infection rates rise and restrictive measures remain in place across many countries. New infections are spiking again across 13 of the G-20 countries. Nevertheless, the number of fatalities has decreased in recent weeks as vaccinations gather pace. Traders also paid no heed towards Ministry of Finance latest report stating that provisional Direct Tax collections for the Financial Year 2020-21 show growth of almost 5%, as net collections are at Rs 9.45 lakh crore. The net Direct Tax collections include Corporation Tax (CIT) at Rs 4.57 lakh crore and Personal Income Tax (PIT) including Security Transaction Tax (STT) at Rs 4.88 lakh crore. Finally, the BSE Sensex fell 154.89 points or 0.31% to 49,591.32, while the CNX Nifty was down by 38.95 points or 0.26% to 14,834.85.