FinMin on India's Economic Recovery, Equity Mutual Fund Outflows, and Top Buzzing Stocks Today

Wed, 5 Aug Pre-Open

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Indian share markets ended on a strong note yesterday.

The three-day Monetary Policy Committee meeting kicked off yesterday, which could be driving the market sentiment amid hope for more measures to support the economy. Majority of experts feel the MPC members may cut repo rate by another 25 bps on Thursday in addition to 115 bps cut in previous two meetings.

At the closing bell yesterday, the BSE Sensex stood higher by 511 points (up 1.4%).

The NSE Nifty closed higher by 140 points (up 1.3%).

The BSE Mid Cap index ended down by 0.2%. The BSE Small Cap index ended up by 0.2%.

On the sectoral front, gains were largely seen in the energy sector and banking sector.

IT stocks were under pressure after US President Donald Trump signed an executive order restricting federal agencies from contracting or subcontracting foreign workers, hurting Indian IT professionals who work in the US on the H-1B visa.

Speaking of the current stock market scenario, note that after over 2 years of lag, the smallcap index is beating Sensex in the post Covid rebound.

As per Richa Agarwal, lead smallcap analyst at Equitymaster, the next few days would be crucial for making big gains in smallcap stocks. But while it is time to act, you must tread with caution. Post Covid, Richa expects a lot of clean up in the smallcap space, with only a few quality stocks emerging as winners.

She will be revealing more about these quality stocks online at her Rebound Riches Summit on Friday, 7 August 2020.

To book your free seat for this summit, please click here.

Also, speaking of stock markets, in his latest video, co-head of research, Rahul Shah talks about how you can make winning penny stock investments with the help of few simple ratios. He talks about the most critical data points that are needed to make successful penny stock investments.

Tune in to find out more:

Top Stocks in Focus Today

BPCL will be among the top buzzing stocks today as media reports said the divestment of government's stake in the oil marketing company is unlikely to fructify in the current financial year. Reportedly, the government expects BPCL stake sale to go beyond FY21 as delay in inviting bids to pick stake in the oil refiner will delay the entire process of divestment.

Bandhan Bank will also be in focus after it was reported that, Bandhan Bank's promoter will sell Rs 105 billion worth of equity stake in the private sector lender through a block deal on Monday. The block deal involves selling 337.4 million shares in the lender at a floor price of Rs 311 per share, as per the terms sheet.

Market participants will also track HDFC Bank share price as the Reserve Bank of India (RBI) approved Sashidhar Jagdishan as the bank's next chief executive officer. The private sector lender received the RBI's approval letter and Jagdishan is currently additional director and head of finance, human resources at the bank. He will take over from Aditya Puri, who will step down as the bank's longest serving CEO ever since he took charge 26 years ago. Puri is set to retire by October this year.

Equity MFs to Witness First Monthly Net Outflows in Four Years

Equity mutual funds in India may witness their first monthly net outflows in more than four years as investors continue to cash out to tide over the pandemic-related credit crunch, while others hold off adding more in a rising stock market.

As per the reports, net withdrawals from stock plans may top Rs 10 billion (US$134 million) in July. That would be the first net outflow since March 2016. AMFI data for July is due early next month.

Some are redeeming to book profits after the rebound and others are selling to meet the cash crunch in their businesses in the absence of bank finance.

Gross flows to equity funds are holding up but there's no let-up in redemptions. There will be net outflow for July as things stand today, the reports noted.

We will keep you updated on developments from this space. Stay tuned.

Finance Ministry Says Economic Recovery Fragile Due to Covid-19

The Finance Ministry said India's economic recovery remains "fragile" due to rising number of coronavirus cases and states intermittently ordering lockdowns to contain the disease.

On July 30, the government issued guidelines for the third phase of lifting curbs imposed to stop the spread of the coronavirus disease, removing night curfew outside containment zones and allowing gyms and yoga centers to reopen from August 5.

The guidelines said that schools, colleges, theatres, swimming pools, metro rail, cinema halls and bars will remain closed.

As per the ministry's monthly economic report, India is well on the path to a recovery from a trough in April, ably supported by proactive government and central bank policies. However, the increase in the Covid cases and subsequent intermittent lockdowns make the recovery prospects fragile and call for constant and dynamic monitoring.

The report further said that recovery is linked to how Covid-19 infections evolve across states. India's top 12 growth driving states account for 85% of the Covid-19 case load, with 40% of confirmed cases concentrated in the top two growth drivers i.e. Maharashtra and Tamil Nadu.

The report said that the worst for the economy seemed to be over as high frequency indicators showed a recovery in June compared to May and April.

Indicators include goods and service tax (GST) collections, electricity consumption, rail freight and passenger data, petrol and diesel consumption, and highway toll collections.

GDP figures of April-June quarter of 2020, slated to be released towards end of August, will throw some light on the expected recovery of the Indian economy.

We will keep you updated on the latest developments from this space. Stay tuned.

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

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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