If the current stock valuations look alluring to you, hold on. Nifty50 trades at 15 times one-year forward earnings, in line with the long-term average, and does not reflect the true picture of the economy as the rate of drop in analysts' EPS estimates has so far been quite slow. The 12-month forward EPS has been pruned by just 11 per cent to Rs 600 per share since the beginning of the year despite rising probability of contraction in the country's GDP. That accentuates the risk of earnings downgrade. Indian stocks had bottomed out at 7-8 times of forward earnings during the Global Financial Crisis of 2008.
MARKET CUES: Where we stand >>>  | Nifty futures on the Singapore Exchange traded 109 points higher at 7 am (IST) in signs that Dalal Street may rebound after Monday mayhem |
| Nifty's daily chart pattern resembled an 'Island Reversal' pattern, a formation that does not bode well for the bulls. At Monday's close, the index has decisively broken below its support at 9,560 formed by the upward-sloping trendline seen in last five weeks. |
| Nifty has seen a breakdown from the Rising Trendline on the daily chart. Momentum oscillator RSI has also turned southward and is seeing a negative crossover with its average. India VIX moved up sharply by 28.48% to 43.67 levels, signalling see further pressure on the market with higher volatility. |
| Elsewhere in Asia, stocks rose, with a few markets closed for holidays, as a number of economies moved toward easing lockdowns. Stocks rose in Australia and Singapore. Hong Kong opened higher, even after a record drop in GDP. Markets are closed in Japan, China and South Korea. |
| US stocks ended higher on Monday as increases in large tech and internet companies and oil price gains outweighed concerns about the latest US China tensions. Dow rose 26.07 points, or 0.11%, while S&P500 gained 12.03 points, or 0.42%, and the Nasdaq 105 points, or 1.23%. |
| Oil prices climbed in early trade on Tuesday, adding to gains in the previous session, on expectations that fuel demand will begin to pick up as some U.S. states and nations in Europe and Asia start to ease coronavirus lockdown measures. WTI crude futures rose 8.2% to a three-week high of $22.06 while Brent futures gained 4.1% to hit a high of $28.37 |
| The rupee depreciated by 64 paise to settle at 75.73 against the US dollar on Monday tracking heavy selloff in domestic equities and a strengthening greenback overseas |
| The US Dollar Index rose 0.258%, while the euro fell 0.03% |
| LOOK WHO'S |  |
World economy bottoming out... Goldman Sachs and Morgan Stanley economists said there is evidence the world economy is starting to recover from the coronavirus and the restrictions placed on businesses and consumers. "Economic activity has probably bottomed now," Jan Hatzius, chief economist at Goldman Sachs, said in a report to clients on Monday. At Morgan Stanley, chief economist Chetan Ahya said on Sunday that "a number of the high-frequency indicators we track suggest that the global economy is in the process of bottoming out."
Read More Land pool for Make in India... India is developing a land pool nearly double the size of Luxembourg to lure businesses moving out of China. A total area of 461,589 hectares has been identified across the country for the purpose, Bloomberg reported citing people with the knowledge of the matter. The land pool includes 115,131 hectares of existing industrial land in Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh.
Read More EMI freeze for 3 more months... With further extension of the nationwide lockdown, RBI is considering a proposal to extend the moratorium on bank loans by another three months. Various quarters, including from Indian Banks' Association, have suggested a further extension of the moratorium. As income stream will not resume due to lockdown, many entities and individuals will be unable to service their debt at the end of the present moratorium period ending on May 31.
Read More US push for shift out of China... The Trump administration is "turbocharging" an initiative to remove global industrial supply chains from China as it weighs new tariffs to punish Beijing for its handling of the coronavirus outbreak. Tax incentives and potential re-shoring subsidies are among measures being considered to spur changes, Reuters quoted current and former officials as saying.
Read More | AND WHO'S |  |
FY20 deficit tops 4.4%... India's fiscal deficit for FY20 touched 4.4% of GDP, breaching the target set in February as an economic slowdown reduced tax collections, people with knowledge of the matter said. A revenue shortfall of Rs 1.7 lakh crore led to the higher deficit number. The numbers are not public yet. Finance Minister Nirmala Sitharaman had targeted a 3.8 per cent gap. The slippage adds to the challenges faced by Modi, who is trying to salvage growth that has ground to a halt due to a nationwide lockdown to check the spread of Covid-19.
Read More Awaiting downgrades... Overseas investors have begun to factor in a likely sovereign rating downgrade, with the combined deficit of states and the Centre expected to swell to a seventh of India's gross domestic product (GDP). Many of the estimated 9,500 portfolio investors have the mandate to put cash only into investment-grade countries. Any rating cut by S&P and Fitch will pull India below investment grade.
Read More Nifty headed for 8,800?... Technical analysts are keeping a close eye on 8,800-8,900 levels on Nifty, which would mean a reversal of the over 30% rally seen in the index from the March 24 low of 7,511. Nifty slumped 566 points to close at 9,293 on Monday, while Sensex tumbled 2,002 points to 31,715.3 as the government extended the lockdown by two weeks and world markets declined due to rising US-China tensions. Analysts say a fall below 8,800-8,900 can take the index down further to as much as 8,000 levels, though they do not see Nifty revisiting March lows.
Read More Meanwhile... Factory activity hits record low... India's factory activity collapsed to its record low in April as the coronavirus outbreak and the lockdown smashed new orders and prompted business closures. The April PMI survey pointed to an unprecedented contraction in manufacturing output, slumping to 27.4 in April from 51.8 in March. The reading pointed to the sharpest deterioration in business conditions across sectors since data collection began over 15 years ago.
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