Markets likely to start new week on positive note

Indian markets ended Friday's volatile session flat as losses in metal, auto stocks offset a surge in FMCG majors. Today, the start of new week is likely to be optimistic amid positive exports data coupled with fall in daily Covid cases. Traders will be getting encouragement with the government data showing that India's exports in April jumped nearly three-fold to $30.63 billion from $10.36 billion in the same month last year. Imports too rose to $45.72 billion last month as against $17.12 billion in April 2020. Traders may take note of report that the average of daily cases has fallen for seven days in a row with India reporting 281,860 new cases in the last 24 hours. This is the first time since April 21 that India has recorded new cases below the 300,000 mark. Some support will come as the India Meteorological Department (IMD) said the southwest monsoon is likely to arrive over Kerala on May 31, a day earlier than its normal onset date. The normal onset date of the monsoon over Kerala is June 1. Though, there may be some cautiousness as Care ratings’ latest survey stated that amid a raging second wave of COVID-19 and subsequent restrictions on business activities imposed by several states, economic recovery is beginning to lose steam and the country's GDP growth is likely to be below nine per cent for the current fiscal. Also, foreign portfolio investors (FPIs) pulled out Rs 6,452 crore so far in May from Indian markets amid tumbling investor sentiment due to the second wave of the COVID-19 pandemic. Meanwhile, investors will be eyeing the Wholesale Price Index-based inflation data to be announced on Monday. There will be some buzz in pharma stocks with report that the fresh wave of Covid-19 in the country has pushed up sales of medicines and resulted in exponential growth for the pharmaceutical sector. Hotel industry stocks will be in focus as the Federation of Hotel & Restaurant Associations of India (FHRAI) said the Indian hotel industry has taken a hit of over Rs 1.30 lakh crore in revenue for the fiscal year 2020-21 due to the impact of the COVID-19 pandemic. There will be some reaction in oil industry stocks with a private report that India’s oil demand worsened in the first half of May as large parts of the nation remained under local lockdowns to battle the world’s worst outbreak of Covid-19. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended higher on Friday an upbeat conclusion to whipsaw week of buying and selling as signs of a rebounding economy squared off against mounting inflation jitters. Asian markets are trading mixed on Monday as data on Chinese retail sales missed expectations though industrial output stayed solid, while more evidence of global inflation pressures helped gold to a three-month peak.

Back home, Indian equity benchmarks ended the Friday’s trade on quiet note as traders remain worried over the economic impact of the second wave of COVID-19 and lockdowns and restrictions in various states. The Maharashtra government has extended the lockdown-like restrictions in the state till June 1 to break the chain of COVID-19. However, drop in Covid cases limit the downside. India reported a dip in fresh Covid cases to below 3.5 lakh mark at 3,43,122. This was lower than Wednesday's figure of 3,62,720 cases. However, traders took some support from IIP and CPI numbers. India’s factory output climbed 22.4 per cent in March, benefiting from the base effect of the lockdown-marred month a year back as well as a turnaround in the manufacturing sector, while retail inflation slipped to a three-month low of 4.29 per cent in April. Investors are eyeing WPI inflation data for April slated to be declared later in the day. Markets traded in tight range near neutral lines and ended almost flat as reports states that earnings in Q1 FY22 will be lower than initial estimates, also weigh down sentiments. Though, trader took some solace with private report stating that the value of foreign portfolio investors' (FPI) holdings in domestic equities reached $552 billion in three months to March 2021, a surge of 7 per cent from the preceding quarter. This was largely on the back of robust net inflows from FPIs, coupled with a strong performance of the Indian equity markets. Besides, Retailers Association of India (RAI) said workers and businesses in the retail industry are in need of urgent support as the restrictions to combat the second wave of the COVID-19 pandemic has hit them hard. With the days of the lockdown continuing to extend in various parts of the country, RAI said it is getting increasingly difficult for retailers to retain employees and to keep their businesses afloat, and there is a need to inject capital into the industry. Finally, the BSE Sensex gained 41.75 points or 0.09% to 48,732.55, while the CNX Nifty was down by 18.70 points or 0.13% to 14,677.80.