PSB Loans to MSMEs, Rise in Fuel Prices, and Top Cues in Focus Today

Tue, 9 Jun Pre-Open

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Indian share markets ended marginally higher yesterday.

After opening on a strong note, benchmark indices erased most of the gains in the last hour of trading.

Sectoral indices ended on a mixed note with stocks in the oil & gas sector and IT sector witnessing buying interest.

After rising more than 600 points in early trade yesterday, the BSE Sensex ended up by 83 points.

Meanwhile, the NSE Nifty stood higher by 25 points.

The BSE Mid Cap index and the BSE Small Cap index ended up by 0.2% and 0.9%, respectively.

Global stock markets rallied yesterday on the back of a surprise recovery in US employment, which provided cause for optimism that global economies could quickly revive after many weeks of lockdowns aimed at controlling the coronavirus pandemic.

Speaking of Indian stock markets, after the long coronavirus lockdown, the Unlock 1.0 phase has been surprisingly positive for the stock markets.

Most have justified the sharp run of last few sessions in Indian stock markets on the grounds that all negative news is already priced in.

But is that truly the case? Or is there something more to it?

In her recent video, Tanushree Banerjee answers these questions and talks about how investors should act on the Unlock 1.0 market rally.

Tune in to know more...

Top Stocks in Focus Today

Vodafone Idea share price will be in focus today. Shares of the company traded higher for the 10th straight day yesterday and surged 20% intraday to Rs 12.60 on the NSE in early morning trade.

In the past 10 sessions, the stock price of the company has zoomed about 129% from the level of Rs 5.50 hit on May 26.

As per reports, the sharp rally in the past couple of weeks has been fuelled by reports that global technology giant Google is in talks to buy a 5% stake in the company. However, the company clarified on May 29 that it was constantly evaluating various opportunities but there was no proposal before the board of the firm as yet.

AstraZeneca Pharma will also be in focus today as AstraZeneca Plc has made a preliminary approach to rival Gilead Sciences Inc. about a potential merger, in what would be the biggest health-care deal on record.

Reportedly, the firm informally contacted Gilead last month to gauge its interest in a possible tie-up.

Market participants will also track SBI share price as about 21.8% of SBI's retail borrowers have availed the three-month moratorium on repayments, from March to May, offered by the bank and India's largest bank expects the number to improve for the next three-month period.

The Reserve Bank had initially allowed banks to offer moratorium on repayment of term loans till May 31 but later extended it for another three months (till August) amid the coronavirus pandemic.

PSBs Disburse Rs 83.2 Billion to MSMEs

In news from the banking sector, the Finance Ministry on Sunday said that public sector banks (PSBs) have disbursed Rs 83.2 billion till June 5 under the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector.

Meanwhile, PSBs have sanctioned loans worth Rs 177.1 billion under the 100% ECLGS starting June 1.

State Bank of India (SBI), the country's largest lender has sanctioned Rs 117 billion, while disbursement was nearly half at Rs 60.8 billion at the end of June 5.

It is followed by Punjab National Bank (PNB) with a sanction of Rs 13 billion, but disbursement was less than one-fifth at Rs 2.4 billion.

Last month, the cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25% through ECLGS for the MSME sector.

Under the scheme, 100% guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers, in the form of a guaranteed emergency credit line (GECL) facility.

For this purpose, a corpus of Rs 416 billion was provided by the government spread over the current and the next three financial years.

Note that this scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat package announced by Finance Minister Nirmala Sitharaman last month.

Speaking of the stimulus package, it is interesting to note that unlike the previous stimulus packages, this one is no longer a tiny fraction of India's GDP. It is the largest stimulus package ever announced by India.

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:

Now, executing the package, keeping India's long-term economic interests in mind, will be the key.

Oil & Gas Sector: OMCs Witness Buying; Oil Producers Extend Production Cuts

Shares of oil marketing companies (OMCs) will be in focus today. OMCs witnessed buying interest yesterday after petrol and diesel prices were hiked by 60 paise per litre for a second straight day, thus ending an 83-day hiatus in rate revision.

Shares of Indian Oil Corporation (IOC) gained over 6% intraday yesterday, while BPCL rose over 7%.

Petrol price in Delhi was hiked to Rs 72.46 per litre from Rs 71.86 on Sunday, while diesel rates were increased to Rs 70.59 a litre from Rs 69.99, according to a price notification of state oil marketing companies.

While oil PSUs have regularly revised ATF and LPG prices, they had since March 16 kept petrol and diesel prices on hold, on account of extreme volatility in the international oil markets.

IOC, the nation's largest oil firm, has said that Unlock 1.0 will revive fuel sales soon, owing to the resumption of economic activities.

Meanwhile, OPEC, Russia and allies agreed on Saturday to extend record oil production cuts until the end of July, prolonging a deal that has helped crude prices double in the past two months by withdrawing almost 10% of global supplies from the market.

Initially in April, OPEC+ had agreed that it would cut supply by 9.7 million barrels per day (bpd) during May-June to prop up prices that collapsed due to the coronavirus crisis.

Reacting to the above news, oil prices rose more than 2% in the early trade yesterday. Brent crude climbed to as high as US$ 43.41 a barrel.

Speaking of crude oil, the commodity witnessed selling during the start of the year due to oversupply concerns amid subdued demand.

Prices crashed further in March in what was the worst price dip since the 1991 Gulf War with Brent prices plunging to US$ 31 per barrel.

In April, crude oil futures crashed and briefly went to negative prices, implying that investors would need to pay buyers to take delivery of crude oil amid dwindling storage space.

What effects crude oil prices have on Indian stocks markets and the Indian economy remains to be seen. Meanwhile we will keep you updated on the latest developments from this space.

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

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