May 15, 2020 / 7:04 AM / 11 days ago

Indian shares fall as relief measures fail to impress

BENGALURU, May 15 (Reuters) - Indian shares fell on Friday after details on the government’s economic package failed to impress investors already worried about rising coronavirus cases and poor corporate earnings reports.

India has been unveiling a series of economic measures as part of a 20-trillion-rupee ($265 billion) fiscal and monetary package, but announcements over the past two days - including loan guarantees for small businesses and free food grains for workers - have fallen short of market expectations.

India’s blue-chip NSE Nifty 50 index was set to extend Thursday’s 2.6% loss and record another weekly drop as automotive stocks led declines in Mumbai.

Economists have also said the government’s measures would have a limited impact on fiscal spending as large parts of funding for migrant workers, farmers and small businesses were through state-run banks and financial institutions.

“There is a feeling that these are more liquidity-boosting measures rather than a proper fiscal stimulus,” said Rusmik Oza, head of fundamental research at Kotak Securities in Mumbai. “That link of spurring demand is missing.”

Thursday’s announcement from the government also included new subsidised bank loans for millions of street vendors in the country, but some analysts said the scheme could have little success because of operational issues.

Still, markets are awaiting more announcements from the government, and Finance Minister Nirmala Sitharaman was set to address the media at 1600 local time (1030 GMT) later on Friday - her third press briefing in as many days.

The Nifty 50 was down 0.94% at 9,057.30 by 0550 GMT, while the S&P BSE Sensex fell 1.06% to 30,792.27.

The Nifty auto index fell 1.7% and carmaker Mahindra & Mahindra shed 4.4%.

The outlook for the automotive sector has been worsening as India is under a weeks-long lockdown that has reduced road traffic and travel, while pushing demand for cars to near-zero.

Banking, another sector expected to come under stress due to the COVID-19 crisis, was also affected by the decline on Friday, and the Nifty banking index fell 1.7%. HDFC Bank Ltd , down 1.5%, was the biggest drag on the Nifty 50.

Coronavirus infections in India reached 81,970 as of Friday, inching steadily closer to the tally in China, where the pandemic originated.

Other markets in Asia struggled to extend gains on Friday as deteriorating U.S.-China relations undercut optimism over the reopening of major economies. ($1 = 75.5375 Indian rupees) (Reporting by Sachin Ravikumar; Editing by Anil D’Silva)

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