Markets likely to make negative start of new week

Indian markets ended sharply lower dragged by heavy selling in banking and financial stocks. Today, the markets are likely to make negative start of new week tracking muted cues from global markets. Markets may stay volatile after assembly election result of four states and one union territory. Trends in the election results indicate TMC retained power with two-thirds majority in West Bengal, Left while the BJP have crossed the majority mark in Assam and Left Democratic Front in Kerala. Investors will also track Markit Manufacturing PMI data scheduled to be out later in the day. There will be some cautiousness as snapping their six-month buying spree, foreign investors turned net sellers in April and pulled out Rs 9,659 crore from Indian equities, spooked by the intense second wave of coronavirus and its fallout on the economy. However, some respite may come later in the day with the data released by the commerce and industry ministry showing that the growth of India’s eight key infrastructure segments reached a 32-month high of 6.8 per cent in March compared to a year earlier, mainly due to a low base. Some support will come as the goods and services tax (GST) collections touched a record high at Rs 1.41 trillion in April, surpassing the Rs one trillion mark for the seventh straight month in a row during 2020-21. Also, the commerce ministry's preliminary data showed that India's exports in April jumped nearly three-folds to $30.21 billion from $10.17 billion in the same month last year. Traders may take note of report that the government and the Reserve Bank of India (RBI) are considering relief measures for businesses as India continues to battle the deadly second wave of the Covid-19 pandemic. Meanwhile, India reported a decline in the number of fresh Covid-19 cases. With 370,059 infections in the last 24 hours, the cumulative caseload stands at 19,919,715, Worldometer showed. There will be some buzz in power stocks with power ministry data showing that power consumption in the country grew 41 per cent in April to 119.27 billion units (BU) in the same month last year, showing robust recovery in industrial and commercial demand of electricity. Banking stocks will be in focus as the Reserve Bank has decided to review and strengthen the Risk Based Supervision (RBS) of the banking sector with a view to enable financial sector players to address the emerging challenges. There will be some reaction in coal industry stocks with a private report that India's coal import is expected to be subdued in coming months on account of various factors like prevailing Covid situation, high coal stock in the system and higher international prices. Shares of auto companies will be in focus as investors will react to the auto sales figures for the month of April.  There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended lower on Friday with Amazon, Apple, Alphabet and other tech-related companies weighing on the S&P 500 and Nasdaq. Asian markets are trading mostly in red on Monday as holidays in China and Japan crimped volumes and investors awaited a raft of data this week which should show the U.S. leading a global economic recovery.

Back home, snapping four day gaining streak, Indian equity benchmarks ended the horrendous day of trade with a cut of around two percentage points. Markets started the day on pessimistic note amid persistent rise in Covid cases and hiccups in vaccination drive. Breaking all records, India reported a massive surge of 386,888 cases, Worldometer showed. Besides, Mumbai for instance announced halting vaccination programme for three days due to the non-availability of vaccine stock. Adding more pessimism, the Centre for Monitoring Indian Economy stated that the unemployment rate in India has shot up in the first two weeks of April and the monthly unemployment rate is likely to be close to 8% compared to 6.5% in March with lower absorption of labour in the market. Traders also got cautious amid a private report stating that there has been an over 28 per cent increase in suspected fraudulent digital transaction attempts against businesses originating from India in the pandemic year. Selling got intensified in second half of trade as traders opted to weekly profit in risky assets ahead of weekend. The street took a note of report that markets regulator Sebi said mutual funds will have to make a disclosure about scheme risk-o-meter, performance and portfolio details to investors only for the particular plans in which they have invested. Traders failed to draw any sense of relief on report that Ministry of Finance, Government of India has decided to provide an additional amount of upto Rs 15,000 crore to States as interest free 50 year loan for spending on capital projects. The Department of Expenditure has issued fresh guidelines in this regard on the Scheme of Financial Assistance to States for Capital Expenditure for the financial year 2021-22. Finally, the BSE Sensex fell 983.58 points or 1.98% to 48,782.36, while the CNX Nifty was down by 263.80 points or 1.77% to 14,631.10.