HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Benchmarks trade firm in early deals; Nifty reclaims 9,900 mark
Jun-02-2020

Indian equity benchmarks made slightly positive start on Tuesday taking lead from Asian peers amid optimism about the reopening of economies around the world. But, soon markets gained traction and are trading higher with gains of around a percent each in early deals. Some support came in with the India Meteorological Department’s (IMD) statement that the Southwest monsoon arrived in India on June 01 with heavy rainfall over several places in Kerala, marking the commencement of the four-month long rainfall season. It also upgraded its forecast for 2020 rainfall to 102% of the Long Period Average (LPA), from the 100% in April. The forecast is with a model error of plus and minus of 4%. Adding some optimism, the Centre rolled out Rs 20,000 crore distressed asset fund to extend support to promoters of distress units, in order to support stressed micro, small and medium enterprises (MSMEs). Traders overlooked report that Moody’s has downgraded the Government of India's foreign-currency and local-currency long-term issuer ratings to Baa3 from Baa2. Meanwhile, India’s total number of coronavirus cases is nearing the 200,000 mark, even as the country is in the midst of a watered-down Lockdown 5.0, or so-called India Unlock 1.0.

On the global front, most of the Asian markets are trading higher following the positive cues overnight from Wall Street. Optimism about the reopening of economies around the world helped offset worries about rising US-China tensions and political unrest in the US. Reports indicated China has told state-owned firms to halt purchases of some US farm goods amid tensions over Hong Kong.

Back home, non-banking finance companies (NBFC) stocks were in focus with Moody’s report that the Reserve Bank of India's decision to extend the moratorium on loan repayment by three more months will be credit negative for NBFC. In scrip specific development, Kotak Mahindra Bank jumped amid report that its promoter Uday Kotak is selling 2.83% stake worth over Rs 6,800 crore in the Bank. Mahindra & Mahindra rallied after reports of a surge in tractor sales in the month of May.

The BSE Sensex is currently trading at 33610.67, up by 307.15 points or 0.92% after trading in a range of 33301.29 and 33658.95. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.23%, while Small cap index was up by 1.39%.

The top gaining sectoral indices on the BSE were Realty up by 2.15%, Auto up by 1.71%, Bankex up by 1.54%, Consumer Discretionary up by 1.52%, Telecom up by 1.32%, while Capital Goods down by 0.15% was the sole losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 6.93%, Mahindra & Mahindra up by 2.68%, Hero MotoCorp up by 2.36%, Bajaj Finance up by 2.26% and Sun Pharma up by 2.17%. On the flip side, Larsen & Toubro down by 0.89%, ITC down by 0.52%, ICICI Bank down by 0.35%, HDFC Bank down by 0.09% and SBI down by 0.09% were the top losers.

Meanwhile, global credit ratings agency -- Moody’s Investors Service has downgraded India’s sovereign rating to ‘Baa3’ from ‘Baa2’, saying there will be challenges in implementation of policies to mitigate risks of a sustained period of low growth and deteriorating fiscal position. It has downgraded the Government of India’s foreign-currency and local-currency long-term issuer ratings to Baa3 from Baa2. It has also downgraded India’s local-currency senior unsecured rating to Baa3 from Baa2, and its short-term local-currency rating to P-3 from P-2. The outlook remains negative.

The negative outlook reflects dominant, mutually-reinforcing, downside risks from deeper stresses in the economy and financial system that could lead to a more severe and prolonged erosion in fiscal strength than Moody’s currently projects. ‘Baa3’ is the lowest investment grade - just a notch above junk status. Besides, it said the Covid-19 pandemic amplifies vulnerabilities in India''s credit profile such as slower growth relative to the country's potential, rising debt and further weakening of debt affordability and persistent stress in parts of the financial system.

Moody’s had in November 2017, after a gap of 13 years, upgraded India’s sovereign credit rating by a notch to Baa2 from Baa3. Moody's said its upgrade of India's ratings to Baa2 in November 2017 was based on the expectation that effective implementation of key reforms would strengthen the sovereign's credit profile through a gradual but persistent improvement in economic, institutional and fiscal strength. Ratings agency said since then, implementation of these reforms has been relatively weak and has not resulted in material credit improvements, indicating limited policy effectiveness.

The CNX Nifty is currently trading at 9915.20, up by 89.05 points or 0.91% after trading in a range of 9824.05 and 9930.95. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 7.43%, Tata Motors up by 2.85%, Mahindra & Mahindra up by 2.53%, Hero MotoCorp up by 2.46% and Zee Entertainment up by 2.42%. On the flip side, Coal India down by 2.86%, Larsen & Toubro down by 0.99%, BPCL down by 0.87%, ICICI Bank down by 0.60% and ITC down by 0.60% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 261.44 points or 1.19% to 22,323.83, Straits Times jumped 31.16 points or 1.22% to 2,582.02, Hang Seng rose 90.51 points or 0.38% to 23,823.03, Taiwan Weighted gained 51.74 points or 0.47% to 11,130.76, KOSPI soared 16.92 points or 0.82% to 2,082.00 and Jakarta Composite climbed 113.03 points or 2.38% to 4,866.64, while Shanghai Composite was down by 3.34 points or 0.11% to 2,912.09.
  RELATED NEWS >>
Most Viewed >>
April 22 , 2024
Nifty 500: Get diversification with better ret
April 22 , 2024
FPIs withdraw over Rs 5,200 crore in April so
April 22 , 2024
Invest lumpsum through systematic transfer pla
April 22 , 2024
Investment bankers to receive hefty bonuses as
EXPLORE
© CITRUS INTERACTIVE
Designed & Developed Accord Fintech Pvt. Ltd.