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Markets likely to get flat-to-positive start of new week
Aug-10-2020

Indian markets ended a choppy trading session flat on Friday tracking weak Asian and European markets coupled with Spiking coronavirus cases in the country. Today, the markets likely to get flat-to-positive start of new week amid mixed Asian cues. Traders will be getting encouragement as Prime Minister Narendra Modi launched a financing facility of Rs 1 lakh crore under the Agri-Infra Fund that will help create post-harvest infrastructure in villages and generate jobs. Some support will also come with Niti Aayog CEO Amitabh Kant’s statement that India's FDI regime is the most liberal in the world, and even during the COVID-19 pandemic, the country has attracted over $22 billion worth of direct investments. However, rising coronavirus cases may dampen the sentiments in markets. The count of coronavirus cases in India jumped to 2,214,137, with the country reporting 62,117 new infections. The death toll from the pandemic reached 44,466, according to the Worldometer website. Traders may be concerned with a survey from the Reserve Bank of India (RBI) showing that consumer confidence fell to a record low last month as Indians grew more pessimistic about their jobs, incomes and spending. Telecom stocks will be in focus as the Supreme Court is expected to give its final verdict in the AGR case today. This will decide whether the telecom companies will be allowed a relaxed payment structure for clearing the dues they owe to the Union government. Defence-related stocks may also in limelight after the government announced a phased, year-wise embargo on the import of 101 items of defence equipment. There will be some reaction in coal stocks with a private report that India's coal import fell 43.2% to 11.13 MT in July this year on account of high stockpile of the dry fuel at pitheads, plants and ports. There will be lots of earnings reaction based on the performance of the companies.

The US markets closed mostly in green on Friday as the latest employment report showed the economy added more jobs than expected last month, though uncertainty surrounding fresh government stimulus threatened to crimp a recovery. Asian markets are trading mixed on Monday amid the heightened US-China tensions in recent weeks.

Back home, in a highly volatile session, Indian equity benchmarks reversed all of their initial losses to end flat with a positive bias on Friday, with frontline gauges managing to stay above their crucial 38,000 (Sensex) and 11,200 (Nifty) levels. Domestic share markets opened in negative territory and traded choppy for most part of the day, as muted cues from global markets and spiking COVID-19 cases in the country kept investors on the edge. The sentiments remained in lackluster mood with a private report stated that business optimism for the July-September quarter slumped to a record low due to sharp rise in COVID-19 cases, the extension of lockdown in containment zones and staggered easing of restrictions. Some cautiousness also came as the Reserve Bank of India sounded a note of caution saying that protracted spread of the COVID-19 pandemic poses downside risk to the domestic economy which is expected to remain in the negative zone in the current fiscal (FY21). However, markets managed to pared all of their losses in late hour of trade, as some optimism remained among traders in with Union Minister Jitendra Singh’s statement that India will be an important pillar of the post-coronavirus global economic recovery and that the road map for winning the battle against the pandemic lies in countries restarting the economy and strengthening cooperative federalism. Traders also took some support with a private report that the Centre is looking to expand the scope of its Production-Linked Incentive (PLI) scheme to a few more sectors. The Finance Ministry, NITI Aayog and line ministries are reportedly discussing the PLI scheme for sectors such as chemicals, fertilisers, solar equipment including solar cells, power equipment sector, electric vehicle (EV) components (batteries, auto parts). Finally, the BSE Sensex gained 15.12 points or 0.04% to 38,040.57, while the CNX Nifty was up by 13.90 points or 0.12% to 11,214.05.

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