Massive economic relief package failed to impress share markets; here’s what to expect next week

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May 16, 2020 12:20 PM

Banking stocks witnessed the selling pressure on Friday with Nifty Bank down by 1.23 per cent. The biggest losers among the banking stocks were Bank of Baroda, Federal Bank, Bandhan Bank, Axis Bank and RBL Bank

Sensex, NiftyBSE’s market capitalisation plunged by Rs 7 lakh crore to sit at Rs 122 lakh crore at the end of the Friday’s trading session

Headline indices BSE Sensex and Nifty 50 ended the Friday’s session on a flat note as the economic relief package announced by the government to revive the battered economy failed to lift sentiment. Sensex ended just 25 points or 0.08 per cent down at 31,097, while the broader Nifty 50 index finished flat at 9,137. The much-awaited economic relief package cheered up the equity markets with a gain of 2 per cent on the very next day, but then gave up its gains in the following days and closed the week down by nearly 2 per cent on a weekly basis. Foreign portfolio investors (FPIs) continued to sell equities on Friday, offloading shares worth Rs 2,388 crore. On the other hand, domestic institutional investors bought equities worth Rs 1,225.53 crore on a net basis in the Indian equity market. “During the week, markets traded in a narrow range but with wide overnight gaps making people wary of keeping open positions. Open Interest in Nifty Futures was the lowest in the last 15 years. Weak hearted traders are virtually out of D-Street as markets are heading towards an unchartered highway,” said Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote.

Investors wealth erodes by Rs 7 lakh crore: At the end of the April, investors wealth stood at Rs 129 lakh crore. With so much going on in May, the BSE’s market capitalisation plunged by Rs 7 lakh crore to sit at Rs 122 lakh crore at the end of the Friday’s trading session.

Banking stocks capped the gains: Banking stocks witnessed the selling pressure on Friday with Nifty Bank down by 1.23 per cent. The biggest losers among the banking stocks were Bank of Baroda, Federal Bank, Bandhan Bank, Axis Bank and RBL Bank, down in the range of 2.7-3.7 per cent.

Rs 20 lakh crore economic package: Prime Narendra Modi announced an economic package of worth Rs 20 lakh crore to revive the country’s economy battered by the lockdown induced by the novel coronavirus. The government has been providing the finer details of this massive package in tranches. So far, announcements have been made related to MSMEs, non-banking finance companies (NBFCs), migrant workers, street vendors, agriculture, allied activities and farms produced related administrative reforms. “This move was to inject liquidity and keep afloat livelihood through targeted loans to MSMEs, farmers, migrant workers etc. Nonetheless, the crux of the issue such as solvency, viability, visibility of businesses which are temporarily or permanently impaired have not been addressed yet,” Jimeet Modi said.

Expectation for the week ahead: Domestic markets have been performing in line with global markets. Experts believe that in the coming week markets will be driven by the coronavirus newsflow, corporate earnings and norms of the fourth phase of the lockdown. “Government has made it clear that it will introduce the measures in tranches, but the execution is key and that will be followed by the markets. Markets will also be driven by the rate of infections, lockdown 4.0 norms and any stock-specific earnings commentary in the ongoing results season,” Vinod Nair, Head of Research at Geojit Financial Services, said.

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