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Markets likely to get positive start amid firm global cues
Jun-03-2020

Indian markets ended higher for fifth straight day on Tuesday amid optimism over gradual easing of the lockdown curbs coupled with positive cues from global markets. Today, the markets are likely to make positive start tracking firm global cues. Investors will be eyeing the PMI Services data for May to be announced later in the day. Traders will be getting some encouragement as Prime Minister Narendra Modi assured India Inc that growth in the economy will return soon as the government continues to pursue multiple reforms. He added that with unlock phase-1 India has already begun getting its growth back. Some support will also come as the World Bank urged countries to go for comprehensive policies to boost long-term growth along with short term measures to address health emergencies and secure core public services in the wake of the coronavirus crisis, amid indications that 60 million people could be pushed into extreme poverty in 2020. Though, there may be some cautiousness with the data compiled by Worldometer showing that India has seen a surge of over 8,500 cases in a day, taking its total number of coronavirus cases to 207,191. The country's death toll now stands at 5,829. Traders may be concerned with Former finance secretary Subhash Chandra Garg’s statement that the Indian economy will shrink by 10% or Rs 20 lakh crore in the ongoing fiscal, the first contraction in over 40 years, due to a faulty COVID lockdown. There will be some buzz in the sugar stocks with industry body ISMA’s statement that with further relaxations in COVID-19 lockdown rules, sugar demand in India has started picking up and will further improve with opening of hotels and restaurants. NBFCs stocks will be in focus with ICRA’s report that the extension of moratorium on loan repayments till August by the Reserve Bank of India will impact non-banking financial companies' (NBFCs) collections and affect their liquidity conditions. There will be some reaction in steel sector stocks with India Ratings’ (IndRa) statement that as construction activities were impacted due to the extended lockdown, onset of monsoon and mass migration of labourers, operating profit or EBITDA of steel producers is expected to decline by 20-30 percent in the current fiscal due to lower demand and price realisation.

The US markets ended higher on Tuesday amid optimism about an economy recovery as businesses reopen following the coronavirus-induced shutdown. Asian markets are trading in green on Wednesday following rally on Wall Street overnight.

Back home, bringing up fifth-day of gains, Indian equity benchmarks finished Tuesday’s session on a higher note, driven by strong buying across Realty and Banking stocks amid positive cues from global markets. After opening on a tepid note, key indices gained traction and traded in fine fettle, as investors took encouragement 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%. Sentiments also remained up-beat as 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). Buying got intensified in the late afternoon session, as sentiments remained buoyant with Prime Minister Narendra Modi’s statement that India will definitely get its economic growth back as the government continues to pursue various reforms. He said the government has taken tough steps to fight the coronavirus pandemic and has also taken care of the economy. Market participants paid no heed towards report that Moody’s has downgraded the Government of India's foreign-currency and local-currency long-term issuer ratings 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. Finally, the BSE Sensex gained 522.01 points or 1.57% to 33,825.53, while the CNX Nifty was up by 152.95 points or 1.56% to 9,979.10.
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