Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could fall 47 points at the opening bell.
S&P Global Ratings said on June 26 that the Indian economy is in deep trouble with growth expected to contract by 5% in FY21. Difficulties in containing the virus, an anemic policy response, and underlying vulnerabilities, especially across the financial sector, are leading us to expect growth to fall by 5% this fiscal year before rebounding in 2021, S&P said in a report.
Banks may lend less than they normally would in a recovery to focus on the overhang from the pandemic. Private firms may prefer to stabilize debt rather than ramp up spending on new investments, even though demand is improving, S&P said.
Overseas, Asian stocks are trading lower on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy.
Retail sales in Japan tumbled at a double-digit pace for the second straight month in May as the coronavirus pandemic and lockdown measures delivered a heavy blow to consumer confidence.
Retail sales fell 12.3% in May from a year earlier, pulled down by a slump in spending on big ticket items such as cars as well as clothing and general merchandise, trade ministry data showed on Monday. The decline followed a 13.9% drop in April, which was the biggest fall since March 1998.
In US, stock indexes closed with sharp losses on Friday, after Texas and Florida were forced to backtrack on reopening their economies as coronavirus cases rose further and a record number of new cases were reported nationwide.
Governors in Texas and Florida ordered all bars to close again on Friday, making the states the first to reverse some reopening measures after months of lockdowns.
The Federal Reserve's annual stress test of the major banks showed some banks could get close to minimum capital levels in scenarios related to the coronavirus pandemic. Because of this, banks must suspend share repurchase programs and cap dividend payments at current levels for the third quarter.
In U.S. economic data, consumer spending climbed in May to a record 8.2% after tumbling in April, as consumers used government stimulus checks to help Americans deal with job losses during the pandemic. However, personal incomes sank 4.2% last month, reflecting the mass unemployment. Social media stocks dropped after Unilever N.V. said it would join in halting advertising on the platforms until hate speech concerns were addressed.
In other economic reports, the final results of the consumer-sentiment survey in June slipped to 78.1 from an initial 78.9, the University of Michigan said Friday.
Back home, key domestic benchmarks ended with strong gains on Friday, supported by rally in IT shares. The barometer S&P BSE Sensex rallied 329.17 points or 0.94% at 35,171.27. The Nifty 50 index added 94.10 points or 0.91% at 10,383. Positive global cues boosted sentiment.
Foreign portfolio investors (FPIs) sold shares worth Rs 753.18 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,304.18 crore in the Indian equity market on 26 June, provisional data showed.
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