Indian Market Outlook:
The Key benchmark indices climbed this week on the hope of second stimulus package and RBI announced liquidity measures to support the economy and coronavirus pandemic. The rally in BSE Sensex and Nifty 50 was supported by the gains in banking and financial stocks. In the week ended, the S&P BSE Sensex index added a total 429.10 points to clock a gain of 1.38 per cent, whereas NSE Nifty 50 benchmark rose 154.85 points or 1.70 per cent. BSE Mid Cap Index rose 449.72 points or 3.95 % to settle at 11824.07 while the BSE small Cap index rose 4.93% to settle at 10800.91. Over the week, FIIs were the net sellers for the week, sell equities worth Rs.4196.77 crore with the DIIs also were the net sellers of Rs.339.07 crore. RBI announced relief on the NPA recognition and stressed asset reclassification for Bank and 25bps reduction in the reverse repo rate will encourage banks to lend more and improve liquidity in the system. US crude oil prices dipped below $18 a barrel on Friday, the lowest level since 2002, after OPEC lowered its global oil demand forecast due to the “historic shock” delivered by the coronavirus outbreak. The fall in crude Oil Prices will lower the cost of Paint, Cement Companies and will also add margins to the OMCs. Going forward, there will be volatility in the markets following the corporate earnings announcements.
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- The Reserve Bank of India (RBI) on Friday freed up more capital for banks to lend, announced a fresh Rs 50,000 crore targeted long-term repo operation (LTRO 2.0) to address the liquidity stress of shadow banks and microfinance institutions and hinted at the possibility of further rate cuts going forward. Addressing media for a second time within a month, RBI Governor Shaktikanta Das unveiled fresh measures aimed at maintaining adequate liquidity in the system, facilitating and incentivize banks to ensure better credit flow and enabling normal functioning of the financial markets.
- Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said the International Monetary Fund’s (IMF) projection of 1.9 per cent GDP growth for India is highest among G20 nations, while the country is expected to post a sharp turnaround in FY22. Quoting IMF global growth projections, the RBI Governor said, “India is among the handful of countries that is projected to cling on tenuously to positive growth at 1.9 per cent. In fact, this is the highest growth rate among the G-20 economies.”
- Amid the coronavirus outbreak in the country, more than 100 proposals seeking green clearance for production of bulk drugs or active pharmaceutical ingredients (API) have been received by states in the last two weeks after the Centre amended rules to expedite the process of giving environmental approval. To address the unprecedented situation arising from the global outbreak of COVID-19 and to ramp up availability or production of various drugs, the environment ministry (MoEF) had last month amended Environment Impact Assessment (EIA) notification for expediting the environmental clearance for API related projects saying they will get the approval at state level itself.
- Industry body CII on Friday said discoms are likely to suffer a net revenue loss of around Rs 30,000 crore and liquidity crunch of about Rs 50,000 crore due to the coronavirus-induced nationwide lockdown. According to the report, power sector, one of the essential services under the lockdown till May 3, is battling the twin issues of demand and liquidity compression. Latest data from Power System Operation Corporation Limited (POSOCO) indicates that total demand per week between March 23 and April 12 was 18 BU (billion units), compared to 23 BU during the week of March 9-15 (before Janata Curfew and lockdown), 25-28 per cent reduction in demand.
- Muthoot Finance will re-open all the branches across India from Monday, April 20, 2020. The company will resume all services while ensuring maximum safety and precautions of its customers. However, as the government will strictly monitor red spots and orange spots, Muthoot Finance will oblige to the local orders of the cities they operate in. Depending on the gravity of the situation in a particular state/city, the regional heads will be taking extra precautions.
- The COVID-19 outbreak has resulted in a surge of local brands launching hygiene products such as hand sanitisers and hand wash. A report published by Nielsen on the impact of COVID-19 on the FMCG market says that as many as 152 new hand sanitiser manufacturers entered the fray in March. The value share of the new players has grown 46 per cent. While market leaders such as HUL and Reckitt Benckiser had an 85 per cent market share in February, this was reduced to 39 per cent by March, the Nielsen report says. Apart from many local players entering the fray, a lot of bigger FMCG majors such as Marico, Cavinkare, Emami and P&G, which earlier were not present in hand sanitisers segment, have launched their respective sanitiser brands.
- Larsen & Toubro (L&T) on Friday announced a significant order win for its building and factory business. With this order, the company has announced order wins worth up to Rs 27,000 crore so far in April. Most of these orders were from clients in the domestic market. In total, they are valued between Rs 14,500 crore and Rs 27,000 crore. The company does not disclose exact order values, but shares a range.
- US Oil prices fell on Friday as news of President Donald Trump’s plans to ease the U.S. coronavirus lockdown to get the American economy moving again were quickly overshadowed by China’s worst quarterly economic contraction on record. U.S. crude for June fell 1.5%, or 39 cents, to trade at $25.14 per barrel. Brent rose 44 cents to trade at $28.26 per barrel. The less active U.S. crude contract for May tumbled $1.60, or 8.1%, to to settle at $18.27, attributable to the imminent expiry of the contract, on April 21, and fast-filling crude storage.
- U.S. stocks rose on the day Friday and also posted gains for the week, boosted by a surge in Boeing shares, President Donald Trump’s plan to reopen the coronavirus-battered economy and hopes of a potential drug by Gilead to treat COVID-19. The Nasdaq added 6.1% for the week and registered its biggest two-week percentage gain since 2001.
(Source: Bloomberg Quint, Economic Times, Business Today,Business Standard, Investing, Financial Times Moneycontrol, livemint)
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