Rs 20 lakh crore stimulus package | Blockbuster gap up opening seen, Nifty may cross 9,500 levels

Equity benchmark indices are expected to open on a strong note on May 13 after Prime Minister Narendra Modi announced an economic package worth Rs 20 lakh crore on May 12.

The package is much higher than that expected by the street. The latter was expecting a package worth around Rs 6-8 lakh crore to revive the economy that was impacted by the novel coronavirus, or COVID-19, pandemic.

"The economic package is almost 10 percent of India's GDP and comes as a shot in the arm for the market. We could see a strong opening on May 12," Vikas Jain, Senior Research Analyst at Reliance Securities, told Moneycontrol.

SGX Nifty futures too indicates a similar trend, up 336.10 points, or 3.64 percent, at 9,561.25 levels.

Prashanth Tapse, AVP Research at Mehta Equities, echoes Jain's views but expects the volatility to persist "as it is a buy-on-dips and a sell-on-rise kind of market."

In the medium term, he feels, the market move would depend on the intensity of the COVID-19 spread and follow-up packages from the finance ministry.

Earlier on May 12, the Sensex and Nifty recovered sharply from the day's low to close marginally flat after news emerged that PM Modi would address the nation in the evening.

While addressing the nation, PM Modi focused on five pillars that will help make India self-reliant. "India can be self-reliant. But for that, we need to strengthen five pillars: economy, infrastructure, our system, India's demography and the demand-supply chain."

He said the package would focus on poor, skilled and unskilled labourers, farmers and fishermen. "The package will focus on uplifting every farmer and worker, the middle-class who pays taxes and industry. It will also focus on strengthening infrastructure and build a robust financial system."

Finance Minister will announce details of the Rs 20 lakh crore package in phases starting May 13.

'Impressive' that how VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, described the stimulus package. "This is impressive considering the fact that the average emerging market (EM) relief, so far, is only 2.5 percent of GDP. The uniqueness of the package is that it has a grand vision beyond relief and stimulus. The package built on reforms relating to land, labour, liquidity and laws indicates that it aims to convert the present crises into an opportunity to build a self-reliant India," he stated.

A similar though was shared by Jaspal Bindra, Executive Chairman, Centrum Group. He feels the emphasis on land, labour, manufacturing and infrastructure are suggestive of a structural shift in quantum economic growth.

Bindra took comfort from the PM's words that lockdown 4.0 is likely to offer significant relaxations. "Now that there is comfort with the relative enhancement in medical capacity and preparedness for COVID-19."

PM Modi said Lockdown 4.0 will be based on suggestions of states and will bring in new rules. The information regarding the same will be provided before May 18, he added.

Lockdown 3.0, announced by the government on May 1, will end on May 17.

Here is what other experts said on CNBC-TV18:

Vikram Kirloskar, Chief of CII, said the stimulus package is much higher than any other country. "It shows great vision. If we carry out reforms mentioned by the PM, then we will be much ahead of other countries."

However, Kaushik Das of Deutsche Bank, wants to see the break up of the package.

Sangita Reddy, Joint Managing Director of Apollo Hospitals Enterprises, views the PM's announcements as a a great step towards a greater India. "The package will give a broad framework to India and growth. I also see deeper meaning in the focus on labour and laws."