Benchmarks trade higher amid slight fall in daily coronavirus cases

Indian equity benchmarks made positive start on Tuesday despite mixed global cues. Markets are trading higher with gains of around half a percent each in early deals. Slight fall in daily coronavirus cases supported the markets. India reported a slight dip in the number of fresh Covid infections and fatalities on Tuesday with 319,435 cases and 2,764 deaths, Worldometer showed. Traders also took note of report that the commerce ministry said it has started a COVID-19 helpdesk to help resolve issues of exporters and importers pertaining to international trade such as customs clearance delays and banking matters. Traders overlooked report that global forecasting firm Oxford Economics revised downwards its India GDP growth forecast for 2021 to 10.2 percent from 11.8 percent previously, citing the country's escalating health burden, faltering vaccination rate and lack of a convincing government strategy to contain the pandemic. Meanwhile, the Reserve Bank of India (RBI) warned that the resurgence of the Covid-19 pandemic could bring back inflationary pressures in the country.

On the global front, most of the Asian markets were trading lower following the mixed cues overnight from Wall Street as traders await the Federal Reserve's monetary policy announcement and Chairman Jerome Powell's comments on the economy. They also await cues from the central bank meeting in Japan. Traders also continue to be cautious amid the surge in coronavirus cases in the region, mainly in India and Japan, and the possible lockdowns in several markets, impacting the pace of global economic recovery from the pandemic.

Back home, aviation stocks were in limelight as the Directorate General of Civil Aviation (DGCA) announced that the fare cap on domestic flights would be extended till May 31 and the flights would operate with 80 percent of pre-COVID level passenger capacity.  In scrip specific developments, Castrol India surged after its quarterly profit nearly doubled on higher sales. SBI Cards rose after its March quarter profit jumped to Rs 175 crore from Rs 84 crore in the same period last year.

The BSE Sensex is currently trading at 48589.46, up by 202.95 points or 0.42% after trading in a range of 48399.53 and 48614.65. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.44%, while Small cap index was up by 0.77%.

The gaining sectoral indices on the BSE were Metal up by 1.82%, Basic Materials up by 1.34%, Energy up by 1.31%, Telecom up by 1.30%, Utilities up by 0.88%, while Bankex down by 0.10% was the sole losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.69%, Power Grid up by 1.49%, Bajaj Finance up by 1.17%, Larsen & Toubro up by 1.13% and Bajaj Auto up by 1.10%. On the flip side, Axis Bank down by 2.08%, Tech Mahindra down by 1.20%, Kotak Mahindra Bank down by 0.98%, HCL Tech. down by 0.39% and HDFC down by 0.37% were the top losers.

Meanwhile, Former Finance Secretary SC Garg has said the fresh COVID-19 wave and consequent local lockdowns may bring down the economic growth to less than 10 per cent in the current fiscal (FY22). Earlier this month, International Monetary Fund (IMF) projected an impressive 12.5 per cent growth rate for the country in 2021. The Economic Survey projected a growth rate of 11 per cent, while RBI retained its growth forecast at 10.5 per cent for the ongoing financial year.

He said as per the RBI estimates, economic growth expected to be 26.2 per cent in Q1, 8.3 per cent in Q2, 5.4 per cent in Q3 and 6.2 per cent in Q4 this fiscal. Garg said the COVID-19 surge in the second wave and the flurry of restrictions imposed have dented the growth impulse for the year. He mentioned ‘it is difficult to estimate the intensity and length of surge and virus caseload. How the government handles its response to this unfolding tragedy, the kind of restrictions which the governments might put in place and how the people respond will determine the impact on both demand and supply.’

The first-quarter growth is expected to be tempered around 15-20 per cent as against a contraction of about 24 per cent during the same period last financial year. In the absence of a fresh wave, he said, the growth would have been in the range of 25-30 per cent. Giving assessment for the entire financial year, he said, at this point of time, 2021-22 growth going down to a little below 10 per cent looks quite real.

While praising the idea to junk national lockdown, he said the nuanced approach used so far is likely to limit the monthly damage to less than 0.5 per cent compared to 4 per cent contraction a month had there been complete lockdown. He said the type of restrictions imposed in parts of the country this year will not impact primary sector economic activities (agriculture, mining etc.) more or less. Secondary sector economic activities (manufacturing, utilities, construction etc.) will also have only a minor bruising.

The CNX Nifty is currently trading at 14549.80, up by 64.80 points or 0.45% after trading in a range of 14484.85 and 14556.55. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.83%, Tata Steel up by 1.90%, Hero MotoCorp up by 1.77%, Reliance Industries up by 1.61% and Larsen & Toubro up by 1.19%. On the flip side, Axis Bank down by 1.95%, SBI Life Insuran down by 1.80%, HDFC Life Insurance down by 1.49%, Kotak Mahindra Bank down by 1.13% and Tech Mahindra down by 1.00% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 lost 44.13 points or 0.15% to 29,082.10, Hang Seng fell 35.84 points or 0.12% to 28,916.99, Taiwan Weighted declined 27.69 points or 0.16% to 17,544.60, KOSPI slipped 9.19 points or 0.29% to 3,208.34, Jakarta Composite decreased 4.93 points or 0.08% to 5,959.89 and Shanghai Composite was down by 18.65 points or 0.54% to 3,422.52. However, Straits Times rose 5.59 points or 0.17% to 3,210.49.