Markets at new record closing high as economy gradually unlocks
Premium- The BSE Sensex gained 228.46 points or 0.44% closing at 52,328.51. The Nifty was 81.40 points or 0.52% at 15,751.65.
As the economy is gradually emerging from brutal blow of covid second wave, benchmark Sensex and Nifty once again made record closing high on Monday. As unlock starts wide-spread optimism drove sentiment as investors hope relaxation of restrictions will spur demand and pump growth.
The BSE Sensex gained 228.46 points or 0.44% closing at 52,328.51. The Nifty was 81.40 points or 0.52% at 15,751.65.
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"Domestic equities extended its gains in today’s volatile session ahead of PM Modi’s address to the nation. Hopes of easing restrictions and centre’s covid-19 vaccination policy pumped optimism into the market. Barring metal and pharma, all major sectoral indices belled the day in positive terrain with energy, utilities and power stocks leading the rally," Vinod Nair, head of research, Geojit Financial Services said.
Addressing the nation, Prime Minister Narendra Modi said that the Centre will take over the task of vaccination from state governments and provide covid-19 vaccines free of cost to all adults 21 June. He said private hospitals can continue to procure 25% of vaccines but their charge would be capped at ₹150 per dose.
The PM also said free food grains will be available in fixed quantity every month for over 800 million citizens till Diwali.
Aditi Nayar, Chief Economist, ICRA Ltd said “Higher spending towards free food grains until Diwali and wider vaccine provision, the already announced enhancement in fertiliser subsidy, as well as the likely enlargement in the MGNREGA allocation, now clearly outweigh the savings of around Rs. 1.0 trillion from the prepayment of the Food Corporation of India’s (FCI) liabilities in FY2021, indicating a net expansion in expenditure above the level budgeted for FY2022. This in addition to the potential sharper slippage in disinvestment inflows relative to the higher-than-budgeted surplus transfer by the RBI, suggests a high likelihood that the Government of India's fiscal deficit will exceed the budgeted ₹15.1 trillion. With fiscal costs mounting amid rising crude oil prices, G-sec yields will display a hardening bias despite the announcement of G-SAP 2.0."
Meanwhile, after the all-time high in April, goods and services tax (GST) collections fell to an eight-month low of ₹1.03 trillion in May. Despite lockdown, GST collections in May managed to crossed the ₹1 trillion mark for the eight consecutive month indicating that economic loss due to second wave is not as severe as anticipated.
Meanwhile, India volatility index or VIX fell by 2.34% from 15.94 to 15.57 levels, an indication that investors are hoping for the markets rally to continue.
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