China’s April auto sales grew 4.4% from a year earlier to 2.07 million units, overcoming an early-year collapse due to the coronavirus shutdown and ending a 21-month streak of declines in the world’s largest auto market. That's not the only piece of good news showing how markets are rebounding from the virus disruption. Similar news are coming in from Italy and other beaten down European economies about rapid post-lockdown recovery in demand for cars and washing machines and pickup in Airbnb bookings, Disneyland sellouts etc, which suggest economic forces are coming back full throttle once people have come out of the lockdown. India being a consumer-driven economy, that story should emerge more prominently, say analysts.
MARKET CUES: Where we stand >>>
 | Nifty futures on the Singapore Exchange-traded some 77 points down at 7 am (IST) in signs that the market may encounter weakness on Dalal Street. |
| On Monday Nifty formed a bearish candle with a bit long upper wick, reflecting weakness. It was the fifth consecutive session when Nifty consolidated in the 9,450-9,180 range, which indicated sideways movement and lack of strength on either side. |
| Market’s daily strength indicator RSI continues to remain weak and quoted below the 50 mark, which signals underlying weakness. Momentum indicator Stochastic turned bullish from an oversold zone, indicating that consolidation may continue. |
| Elsewhere in Asia, stocks drifted lower Tuesday as traders assessed the challenges economies face removing restrictions to contain the coronavirus pandemic. Stocks fell in Hong Kong, Sydney and Seoul, and fluctuated in Tokyo and Shanghai. |
| Dow finished solidly lower in overnight trade, as investors mulled hurdles to restarting the economy. Dow shed 109 points, or 0.5%, while the S&P500 gained less than a point and the Nasdaq advanced 71.02 points, or 0.8%. |
| Oil futures climbed in early trade on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June. Brent crude futures climbed to a high of $30.11 a barrel while WTI crude futures rose 1%, or 24 cents, to $24.38. |
| The rupee slipped 19 paise to close at 75.73 against the US dollar on Monday as a strengthening US currency overseas and rising coronavirus cases weighed on investor sentiment. |
| The dollar rose to a two-week high against major peers on Tuesday, propelled by rising U.S. bond yields and increasing safe-haven demand. The biggest loser was the Australian dollar, which dropped about 0.8% to a one-week low. The euro fell below $1.08 for the first time in almost a week. |
| LOOK WHO'S |  |
Easier lockdown beyond May 17... The Prime Minister on Monday impressed upon CMs the need to resume economic activities and asked them to submit individual blueprints by May 15 on how they plan to deal with the “gradual easing of the lockdown” in their states. He said the resumption of train services on select routes was necessary to “rev up” economic activity even as some CMs expressed reservations on this count. While an extension of the lockdown beyond May 17 is on the cards, the Centre is keen on framing broad guidelines for resumption of economic activities.
ESG stocks doing better… ESG indices have not only outperformed globally but also in India, where they have outshone broader benchmarks by more than 5% during the Covid-19 related selloff. The MSCI India ESG Leaders index has declined 15% so far this year, compared with a fall of 20% by the MSCI India index. Fund managers say ESG companies are better equipped to handle “black swan” type risks. The top Indian constituents of MSCI ESG Leaders index include RIL, HDFC, Infosys, TCS, HUL, Bharti Airtel, Axis Bank, HCL Tech, Asian Paints, and Nestle India.
Consumer demand shows up… Signs of a revival in consumer demand are emerging after weeks of a declining trend, as the country gradually opens up for business in the green zones. There is a slow improvement in overall spending across categories — be it for staples, household hygiene, food ordering-in, toys and even beauty — led by consumers in green and orange zones, a survey by Bain & Company showed. It said online channels are starting to become more significant, in particular for essentials, as households increase e-shopping.
Gold finds favour… Fears of a global recession and easy liquidity by central banks across the world have increased the attractiveness of gold as an asset class. Financial planners believe one of the best ways for investors to capture this asset class is through sovereign gold bonds, and investors looking to build allocation could add small amounts in each tranche offered by the government. The second tranche of gold bonds of this fiscal year (FY21) is open till May 15 with the offer price for digital payments at Rs 4,540 per gram, about 1% lower than Rs 4,589 per gram for the previous tranche.
| AND WHO'S |  |
India Inc’s funding costs soar... Funding costs rose across the board both for the sovereign and corporates after the government announced a 50% increase in its borrowing plan for the financial year, raising concerns about excessive bond supply clogging the market. The benchmark gauge surged as much as 20 bps on Monday as investors turned jittery after the central government said on Friday that it planned to borrow more money than estimated in the February Budget. The differential or spread between top-rated corporate bonds and government debt, a barometer for volatility, showed signs of widening.
Global funds hold up India plans… Top global pension funds have suspended India investment plans until they come to grips with the damage Covid-19 does to global and local economies, and their portfolios stabilise amid extreme market volatility and uncertainty. Ontario Teachers’ Pension Plan, Canada Pension Plan Investment Board, Australian Super and Caisse de Dépôt et Placement du Québec, among others, had slated billions of dollars in India directly, via private equity or other funds, but have either put plans on hold or are reconsidering.
NPA risks grow… Private banks like Axis Bank, ICICI Bank and IndusInd have shown their conservative side by raising provisions related to Covid-19 uncertainties as they see a jump in defaults, but that may not be sufficient to cover all the losses that may come up as the cash flow positions of corporates remain precarious after a near two-month lockdown. Analysts said banks have rightly ramped up provisions in anticipation of future losses but the uncertainty about recovery means more may be required in the first two quarters of the current fiscal.
Meanwhile...
Motown depicts bleak picture... India’s automakers have warned that total auto sales could fall as much as 45% in the current fiscal year in a worst-case scenario as economic growth slumps due to Covid-19, and they are seeking government help through the crisis. Industry trade body SIAM told government officials last week that if India’s economy contracts by 2%, sales of cars, trucks and motorbikes could decline by as much as 45% from a year before.
Stocks to Watch >>>
Japan’s largest life insurer by revenue Nippon Life has begun discussions with the Hinduja family-backed IndusInd Bank to explore a strategic investment in the private lender, which is battling bad loans and a potential ratings downgrade.
InterGlobe Enterprises is eyeing Australia’s second-largest airline Virgin Australia Holdings, which went bankrupt last month amid the coronavirus pandemic.
Tata Steel units in the UK and the Netherlands may be on the verge of breaking apart, some 20 years after British Steel merged with Dutch steel major Hoogovens to form Corus.
Shares of IRCTC were locked in 5% upper circuit on Monday after the government announced online booking for passenger trains.
Tata Consumer Products, Biocon, IGL and Torrent Pharma are likely to be included in the MSCI India index in the upcoming half-yearly review of the index.
Piramal Enterprises plunged into losses in the fourth quarter with over Rs 1,900 crore provisioning for potential coronavirus-related losses in its lending business.
Shares of VIP Industries climbed 10% in Monday’s trade after latest shareholding data available on exchanges showed Rakesh Jhunjhunwala increased stake in the company to 5.31%.
The DAY PLANNER
Q4 Earnings: Bandhan Bank | Blue Star | Havells | IndiaMart | Nestle India
Japan April Foreign Exchange Reserves (05.20 am)
China April Inflation Rate (07.00 am)
India March Industrial Production (05.30 pm)
India CPI Inflation Rate April (05.30 pm)
US April Inflation Rate (06.00 pm)
HAPPY TRADING !! 
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