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Domestic indices likely to make optimistic start on Friday
Sep-25-2020

Indian markets ended Thursday's session lower for sixth consecutive session following steep losses in Asian peers amid weak global cues. Today, the markets are likely to get optimistic start tacking firm cues from Asian peers and overnight gains on Wall Street. Some support will come with report that the Reserve Bank of India (RBI) has announced it will conduct simultaneous purchase and sale of government securities under open market operation (OMO) for an aggregate amount of Rs 10,000 crore each on October 1. Traders may take note of report that the government has extended the suspension of insolvency proceedings for any COVID-19 related default by a period of three months, effective from September 25. The Insolvency & Bankruptcy Code (IBC) was suspended for a period of six months with effect from March 25, 2020, by the government earlier, to protect those experiencing financial distress on account of the pandemic. However, there may be some cautiousness with rising coronavirus cases in the country. India on Thursday recorded 85,919 coronavirus cases, taking its total caseload way past the 5.8-million mark. India has added over 1,000 deaths on each of the past 25 days. Meanwhile, the Centre has permitted five states to go for additional borrowing of Rs 9,913 crore through Open Market Borrowings (OMBs) to meet their expenditure requirements amid falling revenues due to the COVID-19 crisis.  These states are Andhra Pradesh, Telangana, Goa, Karnataka and Tripura. Banking stocks will be in limelight with S&P Global Ratings’ report that the Indian banking system will be one of the slowest to return to 2019 levels, and full recovery might stretch beyond 2023. There will be some buzz in the MSME stocks as the Finance Ministry said banks have sanctioned loans of about Rs 1.77 lakh crore to 44.2 lakh business units under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under the slowdown caused by the coronavirus pandemic. NBFCs and HFCs stocks will be in focus as domestic rating agency India Ratings and Research maintained a negative outlook on non-banking financial companies (NBFCs) and housing finance companies (HFCs) for the second half of 2020-21. There will be some reaction in pharma stocks with ratings agency CRISIL’s statement that higher exports will help the Indian pharmaceutical sector come out unscathed from the coronavirus pandemic and deliver a marginally lower 9 per cent revenue growth.

The US markets ended higher on Thursday as beaten-down technology shares gained favor. Asian markets are trading in green on Friday after robust US housing data supported a late tech-driven rally on Wall Street.

Back home, falling for the sixth straight session, domestic equity benchmarks have witnessed massive selling pressure and settled near day’s low point on Thursday, following a heavy selloff in global equities as fears of fresh pandemic restrictions kept domestic investors jittery. All sectoral indices also witnessed deep cuts led by the IT, TECK, Auto and Metal indices down around 4% percent each. Key gauges opened on a negative note and stayed in red for whole day, as traders were anxious with the Department for Promotion of Industry and Internal Trade (DPIIT) in its latest data showed that foreign direct investment (FDI) equity inflows into India contracted by 60 per cent to $6.56 billion (Rs 49,820 crore) in first quarter of current financial year (Q1FY21). The overseas inflows during April-June 2019 stood at $16.33 billion. Market participants also took a note of the Federation of Indian Chambers of Commerce & Industry (FICCI) President Sangita Reddy’s statement that the economy can be revived only by boosting consumer sentiments, which are weak and need measures like discount vouchers from the government to spur the pending. Sentiments remained downbeat with a report by rating agency S&P pointed out that India’s banking system will be among the last in the world to recover from disruptions caused by the covid-19 pandemic. It said we have taken negative rating actions on Indian banks and non-banking financial institutions (NBFIs) as operating conditions have deteriorated through the crisis. The country entered the pandemic with an overhang of high nonperforming assets. The key indices also suffered due a sinking rupee which slipped 32 paise to quote at 73.89 against the US dollar. Separately, Commerce and Industry Minister Piyush Goyal has said that the government is in the process of finalizing a National Logistics Policy which will help bring down logistics cost significantly. He noted that stakeholder consultations are being held for the same. Finally, the BSE Sensex fell 1114.82 points or 2.96% to 36,553.60, while the CNX Nifty was down by 326.30 points or 2.93% to 10,805.55.
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