FM's Stimulus Package Measures, Rising Gold Prices, SGX Nifty Loses, and Top Cues in Focus Today

Fri, 15 May Pre-Open

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Indian share markets witnessed heavy selling pressure yesterday even after Finance Minister Nirmala Sitharaman on Wednesday announced a set of stimulus measures to support micro small and medium enterprises (MSMEs), non-banking financial companies (NBFCs), and power distribution companies.

This was seen as optimism over the economic package was offset by the sell-off in global markets.

Asian equities slipped yesterday following another selloff on Wall Street as US Federal Reserve chief Jerome Powell warned of a "highly uncertain" outlook for the economy, adding that lawmakers might have to provide even more stimulus on top of the US$ 3 trillion already declared.

Further, World Health Organization's warning saying that the virus "may never go away" dampened investor sentiments.

At the closing bell yesterday, the BSE Sensex stood lower by 886 points (down 2.8%) and the NSE Nifty closed down by 241 points (down 2.6%).

The BSE Mid Cap index and the BSE Small Cap index ended down by 0.4% and 0.6%, respectively.

Sectoral indices ended on a mixed note, with stocks in the IT sector, energy sector and finance sector witnessing selling pressure, while healthcare stocks and FMCG stocks ended in green.

The SGX Nifty witnessed huge selling pressure and was trading at 9,118, down by 281 points, at the time of Indian stock market closing hours yesterday.

SGX NIFTY is a derivative of NIFTY index traded officially in Singapore stock exchange.

How it performs this week and affects trades in Indian markets remains to be seen.

We will keep you updated about its movement in upcoming market commentaries. Stay tuned.

Speaking of stock markets, in the recent episode of Investor Hour, Rahul Goel talks to Vijay Bhambwani, who he calls India's #1 trader.

Vijay believes there's money to be made in the market... across asset classes.

He talks about about stocks, bonds, the rupee, gold, silver, crude oil, and pretty much everything of interest to both traders and investors.

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Also, note that the coronavirus impact has shaken markets worldwide. Businesses are seeing unprecedented shifts in a virus struck, locked down economy.

As per Richa Agarwal, editor of our premium smallcap service Hidden Treasure, there are robust smallcap businesses that are not just resilient but likely to emerge stronger from this crisis.

Richa has shared her views on these smallcaps, in the video below. Tune in now...

Gold Witnesses Buying Interest

Domestic gold prices traded higher on the Multi Commodity Exchange (MCX) yesterday as worries over second phase of virus infections dampened risk appetite amid mixed fundamentals.

Weaker economic data and persisting US-China tensions also supported the yellow metal's prices.

Gold June futures rose as much as 0.5% to Rs 46,220 per 10 grams, extending their 0.8% gains of the Wednesday session.

Tracking gold, silver futures on MCX rose 0.5% to Rs 43,207 per kg.

In global markets, however, gold prices eased after US Federal Reserve Chairman Jerome Powell downplayed the possibility of negative interest rates.

Powell said that the US economy faces unprecedented downside risks that could do lasting damage to households and businesses if fiscal and monetary policymakers don't rise to the challenge.

Spot gold eased 0.2% to US$ 1,712.58 per ounce, having jumped 0.8% in the Wednesday's session.

Meanwhile, the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.8% to 1,092.14 tonnes on Wednesday.

Speaking of gold, Apurva Sheth, lead chartist at Equitymaster, talks about a reliable investing signal, which is indicating that gold prices will go higher.

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March Quarter Results

From the FMCG sector, Godrej Consumer Products consolidated net profit for the quarter ended March 2020 declined 75.4% year-on-year (YoY) to Rs 2.3 billion.

The company had logged a profit of Rs 9.4 billion in the year-ago period.

The company's revenue declined 12.2% to Rs 21.5 billion against Rs 24.3 billion reported in the corresponding quarter of the previous fiscal.

Total income for the quarter under review came in at Rs 22,029.6 million, down 11.2% against Rs 24,817.2 million in the year-ago period.

For the full year, the company's net profit declined 36.1% to Rs 15 billion as against Rs 23.4 billion during the previous year ended March 2019.

Sales declined 3.9% to Rs 98.3 billion as against Rs 102.2 billion in the previous year.

The company noted that its sales have been affected adversely due to Covid-19 lockdown in India as well as overseas locations.

To know more, you can read Godrej Consumer's Q4FY20 result analysis on our website.

Moving on, Syngene International reported a 24% year on year (YoY) growth in EBITDA (earnings before interest, taxes, depreciation and amortization) at Rs 2.3 billion in Q4FY20.

EBITDA margin, too, expanded by 300 basis points to 36% from 33% in year ago quarter.

The company posted quarterly revenue of Rs 6.3 billion, a jump of 13% YoY from the corresponding quarter last year, when it had posted a revenue of Rs 5.6 billion.

The company's profit after tax rose 20% to Rs 1.2 billion as against last year's profit of Rs 1 billion.

Reportedly, Q4FY20's performance was driven by strong growth in its discovery and development services divisions. During the quarter, the company commissioned a new research facility at Biocon Park in Bengaluru.

The company further said it has successfully cleared a USFDA inspection of its small molecule bioanalytical laboratory within the clinical development unit with no observations or formal discussion points.

Second Tranche of Nirmala Sitharaman's Stimulus Package Measures

FM Nirmala Sitharaman addressed the media yesterday on the second phase of announcements on government's Rs 20 trillion package.

Here are the top highlights from FM's speech yesterday:

• Second tranche of announcements were focused on migrant workers, street vendors, small traders, self-employed people, small farmers.
• The second tranche had provisions as follows: 3 for migrant workers, 1 sishu loan within Mudra, 1 for Street vendors, 1 for housing, 1 for tribals, 2 for small farmers.
• For migrants who are going back home, the government has generated 42.62 crore persons days of work, which is 40-50% more than before the coronavirus lockdown. It has enrolled them 2.33 crore wage seekers in 1.87 lakh gram panchayats who via MNREGA will get enrolled and get jobs. They will be actively engaged, annual expenditure is Rs 100 billion and the government will provision for more if needed.
• 25 lakh new Kisan credit card holders have been sanctioned loans worth Rs 250 billion.
• An experiment successful was disbursing revolving funds for state benefits to SHGs via PAiSA. For urban poor 7,200 new SHGs groups have been newly formed since March 15.
• Interest subvention for loans to farmers, normally given for prompt repayment, further extended to May 31, 2020. Close to 3 crore marginal farmers had received loans worth Rs 4 lakh crore at low rates. They were also given a moratorium by the RBI.
• MoS Finance Anurag Thakur, who accompained Sitharaman, said the team will come everyday to announce some reform measures for different sectors, as mandated by the Prime Minister.

These were some of the key highlights form the FM's speech yesterday. We will keep you updated on the reform measures announced in coming days for various sectors. Stay tuned.

Note that in March, Finance Minister Nirmala Sitharaman had announced a package of Rs 1.7 trillion.

Unlike the previous stimulus packages, this one is no longer a tiny fraction of India's GDP.

At about 10.2%, it is among the biggest stimulus packages announced over the past few months by governments all around the world. This is evident in the chart below:

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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