Amid lockdown, these stocks rally ahead of FM's stimulus announcements

NEW DELHI: With Dalal Street hoping of a big stimulus package from Finance Minister (FM) Nirmala Sitharam later today, a host of stocks witnessed a rebound from lows despitecompanies announcing lockdowns at plants or shutting of operations.

The FM will unveil the plan at 1 pm later in the day.

At least 14 ministries have drawn up plans that are being assessed along with those of the states. “We need to stagger our response, just like the stages of the outbreak,” a source told ET.

The talk on the Street is of a $20 billion stimulus package which nearly amounts 1 per cent of GDP.

“But given the enormity of the crisis, it could be bigger than that. This also raises the chance of the RBI cutting its policy rates by more than our 50 bps forecast at the meeting on April 3. The lockdown will be associated with a significant drying of financial system liquidity in coming weeks. However, the RBI has been pumping cash into the system and will be prepared to do more to support any surge in liquidity demand,” ING said in a note.

At Thursday’s high of Rs 1,046, shares of InterGlobe Aviation were trading 23 per cent higher over Monday’s close of Rs 850 level. By 12 pm, the stock was up 4 per cent on Thursday.

Peer SpiceJet gained 4 per cent to Rs 35.25 in Thursday’s trade. The scrip has gained 10 per cent over Tuesday’s close.

Aviation stocks are worst hit due to shut down of both international and domestic flights.

"While the government has requested all salaries to be paid on time during the lockdown, we expect further sector focussed measures for the most affected sectors such as airlines, retail, and small businesses," JM Financial said in a note.

Indian Hotels jumped 4 per cent in Thursday’s trade to Rs 78.40 level. The stock is up 5 per cent since Monday, after falling 17.65 per cent on Friday. Lemon Tree gained 6.38 per cent to Rs 23.35 on Thursday, after falling 25 per cent in the three previous session. Travel and tourism sectors were the first to hit due to the virus outbreak.

"The managements of various companies suggest the occupancy for Q4 had begun to take a hit in the third week of February and the situation got accentuated in the past two weeks. We expect the impact of sharp slowdown to show up in Q1," Nirmal Bang said.

Shares of auto makers, which were reportedly facing Rs 6,000 crore inventories and now shutdowns, are on a roll.

Maruti Suzuki, while flat on Thursday, has gained 21 per cent since Monday’s close of Rs 4212.85. The stock hit a high of Rs 5114.45 on Thursday. Mahindra & Mahindra gained 1.3 per cent in addition to 3.3 per cent rise in Wednesday’s trade.

Banking stocks gained up to 30 per cent in Thursday’s trade, with the benchmark BSE Bankex rallying 9.5 per cent on hopes of stimulus measures for India Inc will help restrict non-performing assets (NPAs) in the system.

“There is also a case for RBI to intervene to alleviate the pain of borrowers and lenders either by allowing forbearance of loans or for changes to the bad loan recognition norms from 90 days to higher, in addition to some form of backstop financing for NBFCs,” JM Financial said

In the first phase, an advisory is expected to go out to state governments to pay two months’ pension in advance, allow extra withdrawal of ration in one go, facilitate mid-day meals for children even when schools are closed, and supply dry ration to expectant mothers through Aanganwadi workers.

The other schemes being considered for advance payments are the Mahatma Gandhi National Rural Employment Guarantee Scheme and PM-KISAN, which would put more cash in the hands of the poor. The relief measures will be staggered over three-six weeks, sources told ET.