Markets likely to make gap-up opening of holiday-shortened week

Indian markets ended higher on Friday, following a rise in global peers, mainly led by financials and metal stocks as commodity prices rose. Today, the markets are likely to make gap-up opening of holiday-shortened week tracking firm trend in global peers. A fall in the daily Covid-19 cases may help investors sentiment. With 366,499 fresh infections, India recorded a significant drop in the number of daily Covid-19 cases. Its cumulative caseload now stands at 22,662,410, while 246,146 people have died from the deadly virus. Sentiments will get boost as the Union Health Ministry said more than 72 lakh COVID-19 vaccine doses are still available with states and union territories, while over 46 lakh doses will be received by them within the next three days. Traders will be taking encouragement as data of the commerce ministry showed continuing a positive growth, India's exports grew by 80 per cent to $7.04 billion during the first week of this month. Exports during May 1-7 last year stood at $3.91 billion and $6.48 billion in the same week of May 2019. Some support will come as India and the European Union (EU) announced their decision to resume negotiations for a balanced and comprehensive trade agreement after a gap of eight years and unveiled an ambitious connectivity partnership. Traders may take note of S&P Global Ratings’ statement that India's credit rating would be retained at the current level for the next two years, and the country will see a slightly faster pace of growth in the next couple of years that will support its sovereign rating. Besides, the finance ministry has released Rs 8,923 crore to 25 states for providing grants to the rural local bodies for various prevention and mitigation measures needed to combat the COVID-19 pandemic. However, there may be some cautiousness as foreign investors have pulled out Rs 5,936 crore from the Indian equities in the first week of May amid worries over the intense second wave of coronavirus infection and its fallout on the economy. There will be some buzz in pharma stocks with a private report stating that the domestic pharmaceuticals market has seen a rebound in April, with sales growing 51.5 per cent over last year, thanks to the low base of April 2020 and a pick-up in demand for Covid-19 drugs. Banking stocks will be in focus as the Reserve Bank of India data showed that commercial bank credit in India contracted 0.8 per cent (Rs 89,087 crore) in April, reflecting a lean period at the start of the new financial year (FY22) and the adverse effect of the second wave of Covid-19. The outstanding credit as of April 23, 2021, was Rs 108.60 trillion. There will be some important result announcements to keep the markets in action.

The US markets ended higher on Friday after US jobs data eased concerns over prospects for rising rates. Asian markets are trading in green on Monday amid speculation that interest rates will remain low for an extended period due to the receding risk of a rapid acceleration in inflation.

Back home, extending gaining streak for third straight session, Indian equity benchmarks ended the Friday’s session above their crucial 49,200 (Sensex) and 14,800 (Nifty) levels. Markets started the session on optimistic note on account of upbeat earning from bluechip companies. Traders took encouragement with Union Minister Nitin Gadkari’s statement that the Centre decided to increase production of anti-viral drug Remdesivir and it will be provided to people at government's price. Adding more optimism, secretary ministry of Earth Sciences, M Rajeevan said India’s southwest monsoon is expected to arrive over the Kerala coast on June 1, its normal onset date. Though, the India Meteorological Department (IMD) will officially announce the 2021 monsoon onset date on May 15. However, traders pared some of their profit in afternoon deals after the International Monetary Fund said the recent jump in COVID-19 cases in India posed downside risks to the Fund's April forecast for 12.5% growth in India's economic output in fiscal years 2021 and 2022. Meanwhile, India reported a record 414,433 new infections and 3,920 deaths on Thursday, according to Worldometer. In the second half of the trade, markets gained momentum and ended the session with a gain of over half a percent as traders got boost with Finance Ministry releasing the second monthly installment of revenue deficit grant of Rs 9,871 crore to 17 states. With the release of the second installment, a total amount of Rs 19,742 crore has been released in the first two months of the current financial year as Post Devolution Revenue Deficit Grant to the states. The Centre provides the Post Devolution Revenue Deficit Grant to the states under Article 275 of the Constitution. Market participants also got some support from report that foreign portfolio investors (FPIs) bought shares worth Rs 1,222.58 crore, while domestic institutional investors (DIIs) were net sellers to the tune of Rs 632.51 crore in the Indian equity market on 6 May, provisional data showed. Traders shrugged off Fitch Solutions’ statement that India is likely to breach its fiscal deficit target in the financial year to March 2022 mainly due to revenue shortfall. The government is targeting a deficit between revenue it earns and what it spends at 6.8 per cent of the gross domestic product (GDP) in FY22 (April 2021 to March 2022). Finally, the BSE Sensex surged 256.71 points or 0.52% to 49,206.47, while the CNX Nifty was up by 98.35 points or 0.67% to 14,823.15.