Funds in despair as the stimulus package has not yet come to big relief for industries

Last-minute short-covering amid continued caution over the weekend: Banks, auto stocks sell off funds

- Preference attraction in metal, oil-gas stocks: FPIs / FIIs sell for Rs 5 crore in cash, DIIs buy for Rs 15 crore in cash

(Gujarat News Correspondent) Mumbai, Ta. 15 May 2020, Friday

As part of the Rs 50 lakh crore stimulus package by the Modi government in the wake of the Corona epidemic, Finance Minister Nirmala Sitharaman has announced incentives for MSMEs and small businesses as well as agriculture in two sectors. Were constantly away from the boom. Along with the negative factor of doubling India's fiscal deficit with this massive stimulus package, as well as indications that India's self-reliant mission at the Center is actually focusing on domestic policy, foreign funds chose to ease by selling stocks as a precaution. Of course, the third part of the economic package was announced by the finance minister after the market closed before it was announced for agriculture, fishing, food processing, animal husbandry, but as a precautionary measure, short-selling of short sellers was also seen at the last minute.

International crude oil price lockdowns continued to be strong as the situation eased around the world. A mixed trend was observed in global markets. Banking-finance, automobile, pharma stocks were weak. While selective buying was behind China's positive factory figures in metal-mining stocks and oil-gas stocks were also gaining ground in some stocks. The Sensex was down 2.15 points at 2,108.5 and the Nifty spot was down 2.50 points at 717.8.

The BSE Bankex Index fell by 2.31 points to 316.05 on continued weakness in banking and finance stocks. Federal Bank fell by Rs 1.50 to Rs 2.50, Axis Bank by Rs 13.5 to Rs 4.5, RBL Bank by Rs 2.50 to Rs 120.5, IndusInd Bank by Rs 2.50. ICICI Bank was down by Rs 2.50 to Rs 4.5, State Bank of India was down by Rs 1.9 to Rs 12.50. Equitas fell by Rs 2.15 to Rs 2.50, Repco Home by Rs 4.5 to Rs 111, Bank of Baroda by Rs 1.50 to Rs 21.5, Bandhan Bank by Rs 2.50 to Rs. 2.3, Canfin Home Finance fell by Rs 10 to Rs 2.7, LIC Housing Finance fell by Rs 2.50 to Rs 4.5, Ujjivan fell by Rs 4.5 to Rs 12.50.

With the resumption of partial production in the automobile industry, including Maruti Suzuki, Mahindra & Mahindra, Ashok Leyland, the industry was looking for funds in anticipation of a quick recovery after the lockdown. Frontline stocks, of course, continued to weaken over the weekend. The BSE Auto Index was down 19.5 points at 17,09.31. Mahindra & Mahindra fell by Rs 19.50 to Rs 21.5, Ashok Leyland by Rs 3.10 to Rs 3.15, Cummins India by Rs. 10.50 down to Rs 2.7, Balakrishna Industries down Rs 3.05 to Rs 2.50, Hero MotoCorp down Rs 4.5 to Rs 319, TVS Motor down Rs 2.50 to Rs 4.5, Bajaj Auto fell by Rs 4.5 to Rs 31.5.

In Reliance Industries, the modest short covering rose by Rs 4.5 to Rs 19.50 today. International crude oil prices rose 5 cents to ૯૨ 2.8 this evening, while Brent crude rose 3 cents to close at ૫૫ 21.8. Among other oil and gas stocks, BPCL rose by Rs 2.50 to Rs 515 and GSPL by Rs 1 to Rs 19. Metal-mining stocks were also the pick behind China's figures.

The decision to delist by Vedanta promoters has been increased by Rs 4.5 to Rs 2.50, Sail by Rs 1.50 to Rs 4.5, Hindustan Zinc by Rs 2.50 to Rs 12.5, NMDC by Rs 1. 20 to Rs 2.50, Tata Steel was up by Rs 4.5 to Rs 4.5.

On the last day of the week, small, mid-cap, cash stocks continued to sell and the market breadth remained negative. Out of the total 6 scrips traded on the BSE, the number of decliners was 16 and the number of gainers was 104. Of course, the only buyer in 21 stocks was the bullish circuit. Among 210 stocks, only sellers had a bearish lower circuit. FII-FPI investors had a net sale of Rs 2.09 crore in cash today-Friday. Of this, a total of Rs 4.5 crore was sold against a total purchase of Rs 206.5 crore. On the other hand, DIIs-domestic institutional investors made a net purchase of Rs 12.5 crore in cash today. A total of Rs 2.09 crore was sold against a total purchase of Rs 301.5 crore.

The government has only Rs 50,000 crore for stimulus

According to India Ratings and Research, the government has limited scope for fiscal stimulus, as the government's revised market debt-market borrowing of Rs 15 lakh crore will be largely used to meet revenue shortfalls. The government had projected a total market debt-borrowing of Rs 4.5 lakh crore, but last week announced an additional borrowing of Rs 4.5 lakh crore. With this, a total of Rs 15 lakh crore will be used to meet the special income deficit. Devendra Kumar Pant, chief economist at India Ratings, says the increase will cover a total of Rs 15 lakh crore in borrowing revenue. There will be limited scope for financial stimulus. Provision for this financial stimulus will be possible only if the Center makes a big cut in its budgetary capital expenditure and changes the expenditure priorities.

So there is a limited financial scope for the government to cover the shortage of revenue. If 4.1 per cent of the total borrowing is used to meet this revenue shortfall, the government will save only Rs 20,000 crore in financial stimulus. That is what India Ratings and Research says. Pant expects the government's budget estimates for total and net tax revenue to fall to Rs 4.5 lakh crore and Rs 4.5 lakh crore, respectively.

The lockdown will affect low economic activity and non-tax revenue, and dividends and profits as well as other non-tax revenue will be Rs 1.5 lakh crore less than the budget estimates for FY 2021.