The Indian markets will today react to a host of developments over the weekend which includes the extension of the nationwide lockdown, announcements by Finance Minister Nirmala Sitharaman, and rising number of Covid-19 cases. The Centre extended the nationwide lockdown by another two weeks, until May 31, to contain the spread of the novel coronavirus. Lockdown 4.0, will although, come with some relaxations to pave the way for increased movement of people and facilitate more economic activity.
In its fresh guidelines released late on Sunday, the Centre has empowered the states and union terrirories to delineate zones based on certain parameters and also allowed states to colour code smaller administrative units.
Meanwhile, the number of cases in India shot up to 95,698 with 3,025 deaths, according to Worldometer.
On the stimulus front, the Finance Minister announced the last set of them as part of about Rs 20 trillion fiscal stimulus announced by Prime Minister Narendra Modi. According to the announcements, state-owned units will remain only in strategic areas, which, however, are yet to be defined, while those in other areas will be privatised. The FM raised the borrowing limit of states from 3 per cent of GDP to 5 per cent in FY21, but much of it is conditional on reforms. Although, this, together with the Centre’s additional borrowing of Rs 4.20 trillion, will take the combined fiscal deficit of the country to well over 10 per cent of GDP, analysts say.
In another crucial move, the government also extended the suspension of the IBC to one year, against six months announced earlier, and the insolvency framework for MSMEs. According to experts, although some of these steps are indeed bold public sector reforms, it is unlikely to provide the immediate relief that India Inc needs. If investors read the announcements in similar vein, then more fall in the markets cannot be ruled out.
As such, SGX Nifty was down around 30 points this morning at around 9,080 levels, signalling a lower start. On the other hand, Asian shares crept up on Monday. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 per cent. Japan's Nikkei and South Korean stocks were up 0.2 per cent each in early trade.
In commodities, oil prices jumped to their highest in more than a month. Brent crude was last up 3.82 per cent at $33.74 a barrel.
Corporate results will continue to pour in throughout the week. Companies like Bharti Airtel, Bajaj Auto, Colgate Palmolive, and Dr Reddy’s are scheduled to come out with their March quarter numbers this week.
In stock-specific action, Reliance Industries will remain in focus today after the company announced selling 1.34 per cent stake in Jio Platforms to PE firm General Atlantic for Rs 6,598.38 crore to accelerate consumer business and cut debt. This is the fourth such stake sale within a month. So far, RIL has raised Rs 67,194.75 crore by selling 14.8 per cent in Jio. Moreover, RIL's Rs 53,125 crore rights issue will kick-off on May 20.
Read by: Kanishka Gupta