Local stocks drifted lower in early trade as market reacted to Finance Minister Nirmala Sitharaman's announcement of a slew of policy measures to support the economy amid the coronavirus-led disruption. Extension of the nationwide lockdown also hurt sentiment.
At 9:27 IST, the barometer index, the S&P BSE Sensex, was down 211.65 points or 0.68% at 30,886.08. The Nifty 50 index was down 63.90 points or 0.7% at 9,072.95.
The S&P BSE Mid-Cap index was down 0.59%. The S&P BSE Small-Cap index was down 0.29%.
The market breadth, indicating the overall health of the market, was negative. On the BSE, 562 shares rose and 682 shares fell. A total of 76 shares were unchanged.
Finance Minister provides details of package:
Finance Minister Nirmala Sitharaman provided the details of the fifth tranche of economic package on 17 May 2020. The FM announced a hike in the allocation to the Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGA) by Rs 40,000 crore. The FM also said there will be a maximum of four PSUs in strategic sectors, and state-owned firms in other segments will eventually be privatised. The FM also announced the suspension of new bankruptcy filings on loan defaults for one year and raised the threshold for insolvency under the Insolvency and Bankruptcy Code (IBC) to Rs 1 crore from the current Rs 1 lakh, which largely insulates MSMEs from IBC proceedings. The Centre has also increased the borrowing limit for States by an additional Rs 4.28 lakh crore for FY21.
Finance Minister Nirmala Sitharaman on Saturday (16 May) unveiled structural reforms in eight sectors while announcing the fourth tranche of government's Rs 20 lakh crore economic package. The FM focussed eight sectors in this tranchecoal, minerals, defence production, civil aviation, power distribution, social infrastructure, space and atomic energy. An easing of limits on foreign direct investment in defence manufacturing, privatisation of six more airports, opening up of more airspace and allowing private sector in commercial coal mining were among key announcements.
Macroeconomic data:
India's merchandise exports dipped 60.3% to US$ 10.36 billion in April 2020 over a year ago. Meanwhile, merchandise imports also declined 58.6% to US$ 17.12 billion. The trade deficit fell 55.9% to US$ 6.76 billion in April 2020 from US$ 15.33 billion in April 2019.
Merchandise exports in rupees plunged 56.4% to Rs 78951 crore, while imports declined 54.6% to Rs 130525 crore in April 2020 over April 2019. The trade deficit eased to Rs 51574 crore in April 2020 compared with Rs 106412 crore in April 2019.
As per the data released by the Reserve Bank of India, India's services exports increased 1.2% to US$ 18.16 billion in March 2020 over March 2019. Meanwhile, India's services imports declined 2.2% to US$ 11.11 billion in March 2020.
Lockdown extended:
Meanwhile, in a bid to contain the spread of the novel coronavirus pandemic, the Centre on May 17 extended the nationwide lockdown till May 31. According to the new guidelines, the delineation of red, orange and green zones will be decided by respective states and Union Territory governments after taking into consideration the parameters shared by the Union Ministry of Health and Family Welfare.
Stocks in news:
Reliance Industries (RIL) rose 0.99%. RIL and Jio Platforms announced an investment of Rs 6,598.38 crore by General Atlantic, a leading global growth equity firm. This investment values Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore. General Atlantic's investment will translate into a 1.34% equity stake in Jio Platforms on a fully diluted basis.
Seperately, RIL informed that the rights issue committee of the board of directors, has approved issue opening date of 20 May 2020 and closing date of 3 June 2020.
ITC rose 0.76%. ITC said the company has resumed operations at its factories and plant locations manufacturing non-essential items with limited workforce; the factories and plant locations manufacturing essential items continue to operate, as advised earlier. The company's hotels, however, continue to remain closed, except for those travellers who were stranded due to lockdown or for accommodating identified persons, based on the directions of the respective State Governments and local bodies.
Cipla advanced 2.12%. Cipla's consolidated net profit fell 33.02% to Rs 245.95 crore on 0.67% fall in total income to Rs 4,469.37 crore in Q4 March 2020 over Q4 March 2019.
Cipla's board of directors approved raising funds upto Rs 3000 crores by issue of equity shares or American depository receipts or global depository receipts or foreign currency convertible bonds or other securities / financial instruments convertible into equity shares, whether denominated in Indian Rupee and/or foreign currency(ies), though a public issue or a private placement.
Nippon Life India Asset Management dropped 4.86% after consolidated net profit fell 97.54% to Rs 3.72 crore on 62.37% fall in total income to Rs 149.56 crore in Q4 March 2020 over Q4 March 2019.
Mahindra & Mahindra Financial Services lost 6.11% after consolidated net profit fell 65.79% to Rs 234.82 crore on 8.05% rise in total income to Rs 3,148.47 crore in Q4 March 2020 over Q4 March 2019.
Eveready Industries India rose 2.22% after the company said its battery manufacturing facility at Kolkata is partially operational in a gradual and phased manner.
Global Markets:
Overseas, Asian stocks were trading little changed as U.S. Federal Reserve Chairman Jerome Powell said the economy stateside may need a coronavirus vaccine to fully recover.
On the economic data front, Japan's economy shrank at an annualized rate of 3.4% in January-March, government data showed. That marked the country's second straight quarter of contraction, meeting the technical definition of a recession.
In US, stocks recovered from steep losses early Friday to close higher, despite data showing U.S. April retail sales plunged more than forecasts and news the Trump administration will block shipments of semiconductors to China's Huawei Technologies, stoking fears of renewed trade tensions.
However, sentiment was improved by news the House of Representatives was set to vote on another $3 trillion coronavirus package that could be the opening bid in another round of fiscal stimulus.
In economic data, U.S. retail sales fell 16.4% in April, the Commerce Department reported, as businesses remained all but shut down. Excluding autos, sales still dropped 16.2%.
Industrial production collapsed in April, the Federal Reserve said Friday. Industrial output fell a record 11.2%, pulled down by a record drop in manufacturing. Capacity utilization slumped to a record low 64.9% from 72.7% in March.
The University of Michigan said its preliminary consumer sentiment index for May rose to 73.7 from 71.8 in April.
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