Indian markets recovered to settle on a flat note with financials relatively underperforming on Monday. Today, the markets are likely to make flat-to-negative start tracking mixed cues from global peers. Updates on Covid-19 and the vaccination drive will continue to be the main triggers for the Indian markets. Traders will be concerned with the data compiled by the Centre for Monitoring Indian Economy (CMIE) showing that the second wave of the coronavirus pandemic and the resultant curbs have pushed India’s unemployment rate to a four-month high of 7.97%. The spike in the unemployment rate was seen both in urban and rural areas. There will be some cautiousness as domestic agency India Ratings and Research expects the overall recovery path to be pushed back for most of the service-oriented sectors to FY22, owing to a major supply-side disruption from the second wave of COVID-19 infections. Besides, blaming the slow pace of vaccinations and uncertainty around the number of those infected and dead in the second COVID-19 wave, a private report cut India’s FY22 GDP growth estimate to 10 per cent from earlier 11 per cent. It added that if the ongoing localised lockdowns continue till June, it will lead to economic losses of $38.4 billion. However, some respite may come later in the day with report that India, for the third day in a row, reported a decline in fresh cases, but still logged 355,828 fresh cases, on Monday. With this, the cumulative caseload stands at 20.2 million, Worldometer showed. Some support may also come as Industry body CII urged the government to take strongest national steps including curtailing economic activity to contain the spike in COVID-19 cases in the country. CII President Uday Kotak has asked for highest-level response measures to address the rising wave of COVID-19 cases, as currently safeguarding lives is key to cut the transmission links. Banking stocks will be on focus as the Reserve Bank has decided to review and strengthen the Risk-Based Supervision (RBS) of the banking sector with a view to enabling financial sector players to address the emerging challenges. There will be some important earnings announcements too to keep the markets buzzing.
The US markets ended mostly higher on Monday amid a largely upbeat earnings season, while the Nasdaq came under pressure from declines in some high-flying growth stocks, as the rotation into cyclical and economy reopening stocks continued. Asian markets are trading mixed on Tuesday tracking mixed cues from Wall Street. Trading will be limited with Japan and China among markets closed for holidays.
Back home, buying which emerged in last leg of trade mainly helped Indian equity benchmarks to end flat on Monday. Markets started the day with a gap-down opening as NDA’s sub-par performance in West Bengal assembly election and possibility of emergence of strong opposition from alliance of regional parties to fight against NDA weighed on investors sentiments. Traders also remained cautious on account of persistent rise in the second wave of Covid-19 cases, increasing death cases and extended partial lockdown. Some cautiousness came in as snapping their six-month buying spree, foreign investors turned net sellers in April and pulled out Rs 9,659 crore from Indian equities, spooked by the intense second wave of coronavirus and its fallout on the economy. Market participants got worried, after India's manufacturing sector activity was largely flat in April, as rates of growth for new orders and output eased to eight-month lows amid the intensification of the COVID-19 crisis. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) was at 55.5 in April, little changed from March's reading of 55.4. However, key gauges started paring losses as traders took some support with report that in view of the challenges faced by taxpayers in meeting the statutory and regulatory compliances under Goods & Services Tax (GST) law due to the outbreak of the second wave of COVID-19 pandemic, the Government has unveiled various relief measures for taxpayers. Some support also came in as the goods and services tax (GST) collections touched a record high at Rs 1.41 trillion in April, surpassing the Rs 1 trillion mark for the seventh straight month in a row during 2020-21. Meanwhile, the commerce ministry's preliminary data showed that India's exports in April jumped nearly three-folds to $30.21 billion from $10.17 billion in the same month last year. But, buying in final hour of trade mainly helped key bourses to wipe-out all of their losses to end flat, as market participants took some relief with the data released by the commerce and industry ministry showing that the growth of India’s eight key infrastructure segments reached a 32-month high of 6.8 per cent in March compared to a year earlier, mainly due to a low base. Finally, the BSE Sensex fell 63.84 points or 1.13% to 48,718.52, while the CNX Nifty was down up 3.05 points or 0.02% to 14,634.15.