Markets likely to continue gaining momentum with positive start

Indian markets rallied about 1 percent on Wednesday after the Reserve Bank of India (RBI) announced a raft of measures to help the financial services industry tide over the second coronavirus wave that threatens economic recovery. Today, the markets are likely to extend previous session’s gains with optimistic start following firm trade in Asian peers coupled with a strong set of corporate numbers. Sentiments will be getting boost with a report that Roche India announced that the Central Drugs Standards Control Organisation (CDSCO) has provided an Emergency Use Authorisation (EUA) for its antibody cocktail Casirivimab and Imdevimab in India to treat COVID-19 patients. Some support will come as RBI Governor Shaktikanta Das on Wednesday hoped that a normal Southwest monsoon will have a soothing impact on inflation pressures and ruled out any wide variations in medium-term inflation forecast from what was given in April, despite admitting to price pressures both from food items and input prices. Traders may take note of Asian Development Bank’s (ADB) statement that investment in health, education and social protection alongside deeper regional cooperation can help countries in Asia Pacific region in achieving equitable recovery from the pandemic. However, the addition of another 412,618 fresh Covid cases in the last 24 hours may cap the upside. With this, the cumulative caseload has surged past 21 million, Worldometer showed. Traders may be concerned as principal scientific advisor K Vijayaraghavan said the third phase of the pandemic is inevitable given the high level of circulating virus, without giving a timeframe. There may be some cautiousness as industry chamber PHDCCI said imposition of partial lockdowns and curfews in many parts of the country, due to re-emergence of COVID-19 pandemic, has created incipient signs of economic slowdown in the coming months. Also, S&P Global Ratings has slashed India's GDP growth forecast for the current financial year to 9.8 per cent saying the second COVID wave may derail the budding recovery in the economy and credit conditions. The US-based rating agency in March had a 11 per cent GDP growth forecast for India for the April 2021-March 2022 fiscal on account of a fast economic reopening and fiscal stimulus. Aviation stocks will be in focus as rating agency Icra estimates 29 per cent sequential decline in domestic air traffic in April as the second wave of Covid-19 disrupted air travel. It said in April domestic airlines flew 5.5-5.6 million passengers compared to 7.8 million passengers in March. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended mostly in green on Wednesday driven higher by energy and other economically sensitive sectors. Asian markets are trading higher on Thursday as investors look ahead to the US jobs report due later this week for clues about how long the Fed will stay on hold.

Back home, Indian equity benchmarks ended the Wednesday’s trades in green terrain on Wednesday with Sensex and Nifty ending above their crucial 48,600 and 14,600 levels, respectively. Markets started the day on optimistic note as upbeat earning from several companies aided sentiments. Some support came in with report that Brihanmumbai Municipal Corporation (BMC) received a fresh stock of one lakh COVID vaccine doses and it will resume vaccination of people above 45 years at government vaccination centres. Market participants largely overlooked S&P Global Ratings’ statement that an ongoing second wave of COVID-19 infections in India could hurt its near-term economic recovery and possibly diminish growth for the full year. It added that India's COVID wave will inevitably hit the recovery and could push growth below 10%. Markets extended gains in late trade to end near intraday highs as traders got support after Reserve Bank of India (RBI) Governor Shaktikanta Das unveiled liquidity support measures amid rising Covid-19 cases in India. Shaktikanta Das said that the 2nd wave of COVID-19 in India has drastically altered the economic situation. He added that RBI will continue to monitor emerging situation, using all resources. Further, RBI announced fresh restructuring resolutions for individuals, small businesses and Micro, Small and Medium Enterprises (MSME) borrowers who have an aggregate exposure of upto Rs 25 crore.  Traders shrugged off reports that India's services sector activities eased to a three-month low in April, as the rise in business activity was constrained by the pandemic and sentiment towards growth prospects faded. The seasonally adjusted India Services Business Activity Index fell to 54 in April from 54.6 in March, the slowest increase in output in three months. Finally, the BSE Sensex rose 424.04 points or 0.88% to 48,677.55, while the CNX Nifty was up by 121.35 points or 0.84% to 14,617.85.