Markets Give Thumbs Down To PM’s Package; Indices Shed 3.6% In A Week

Mumbai, 19th May 2020: Indian stock markets have given a big thumbs down to the Prime Minister Narendra Modi’s much talked about Rs 20 lakh crore relief package, which was claimed to be 10 per cent of India’s GDP. The markets were disappointed by the fact that at the end of announcement event spread over four days press conference, when it was dissected, actual package worked out to the tune of as only two per cent of the GDP. Benchmark indices have lost over 3.5 per cent in prices since May 12, when PM appeared on national television to announce the big package. The 30-share Sensex of BSE shed 1,069 points (3.6 per cent) and Nifty-50 of NSE was down 314 points (3.6 per cent) compared to last Tuesday’s closing. 

A week later on Tuesday again, markets settled with a gain of over half a percent amid volatility, after the sharp plunge in the previous session. Initially, the bias was on the positive side, thanks to firm global cues. Global investors’ sentiments are upbeat and oil extended rally on optimism that global economy would recover quickly following a successful early stage trial of a coronavirus vaccine by the US biotech firm Moderna. 

However selling pressure in index majors, mainly from the banking pack, pared the gains as the session progressed. Market participants are also disappointed over the latest announced stimulus package, which promises a very less direct spending by the government. Except financials, other sectoral indices traded in green and provided support to market.

The Nifty index ended higher by 0.6 per cent to close at 8,879 levels.  The Sensex closed with a gain of 0.56 per cent to close at 30,196.17. The mixed trend was witnessed on the sectoral front wherein telecom, auto and IT managed to post decent gains while capital goods and realty ended with the losses.

Ajit Mishra, VP - Research, Religare Broking Ltd, “Markets were dealing with the stress of rapid rise in COVID-19 cases and extension of lockdown and the disappointment from the economic package has worsened the situation. The fear of further deterioration in asset quality of banks and NBFCs has triggered a sharp fall in the banking and financials of late and we do not see this easing out anytime soon. Global positives have also failed to cheer the participants in recent instances. Traders have no option but to align their positions according to the market trend while keeping a check on leveraged positions.” 

Investors are expected to keep a close eye on the corona virus situation, vaccine development and economic situation in the country going ahead.

Sumeet Bagadia, Executive Director, Choice Broking said, “Compare to Nifty, the BankNifty fell further because of few private banks. On Monday, the index gave a breakout of its range-bound movement in which the index had been trading for last many days which suggests a downside movement. At present level, the Index has strong support at 8,800 while upside resistance comes at 9,100-9,200 level”.  

Vinod Nair, Head of Research at Geojit Financial Services said with the stimulus measures seem to be inadequate to boost demand in the short term, investors need to be cautious in this market, as the uncertainties still persist.