Sensex, Nifty likely to get weak start on Tuesday

Indian markets ended lower on Monday after Moody's Investors Service cut its 2020 growth projection for India to 5.4% from 6.6% forecast earlier, citing growing concerns over the economic fallout of the novel coronavirus outbreak. Today, the markets are likely to get a weak start following other Asian peers amid rising coronavirus threats. There will be some cautiousness with Care Ratings’ report that performance of companies during the quarter ended December of the financial year 2019-20 was weak with contraction in revenue and moderation in the growth rate of net profits. It added that the decline in profits, despite the cut in corporate tax, can be attributed to high growth in interest expenses and depreciation. Traders will also be concerned with a report that the International Monetary Fund (IMF) has stated that the goods and services tax (GST) collections in India have been below potential. The organisation said that multiple rates along with exemptions and implementation challenges have affected the GST collections in India. Moreover, WTO (World Trade Organisation) said that growth in world merchandise trade is expected to remain weak in early 2020 and coronavirus outbreak may dampen trade prospects further. However, some respite may come later in the day as a US-based think tank World Population Review in its report said that India emerged as the world's fifth largest economy by overtaking the UK and France in 2019. It added that India is developing into an open-market economy from its previous autarkic policies. Besides, a private report said that payment of adjusted gross revenue dues of Rs 1.20 lakh crore by telcos will reduce the fiscal deficit for 2019-20 to 3.5% of the GDP from the revised estimate of 3.8% of the GDP. Traders may take note of report that Commerce and Industry Minister Piyush Goyal has asked the industry to look for ways to expand the country's export basket by adding more value-added products and cut shipments of raw materials. Meanwhile, capital markets regulator SEBI on Monday decided to amend its investment manager eligibility norms for Infrastructure Investment Trusts and also permit fast-track issuance of units to existing investors in REITs and InvITs. There will be some buzz in the Steel stocks with Union Minister Dharmendra Pradhan's statement that the impact of Coronavirus outbreak will be felt on the global steel industry for at least two to three years, as China is the largest producer of the alloy. The minister also asked Indian steel companies to enhance output, particularly special steel, to grab a larger global market share. There will be some reaction in power stocks with crisil's report that as many as 3 GW of solar projects worth Rs 16,000 crore could be at risk of penalties for missing their respective scheduled commercial operation date (SCOD) if the impact of novel coronavirus on trade with China prolongs.

The US markets remained closed on Monday for the President's Day federal holiday. Asian markets are trading mostly in red in early deals on Tuesday as the new coronavirus outbreak continued to roil companies amid expectations it would cause a slowdown.

Back home, Indian equity benchmarks ended the choppy day of trade with a cut of around half a percent on Monday. Markets started the session slightly in green as traders took encouragement with Finance Minister Nirmala Sitharaman’s statement that if required, the government would take more steps beyond the announcements made in the Union Budget 2020-21 to boost economic activities. Sentiments also got some support with the Reserve Bank of India’s (RBI) data showing that the country's foreign exchange reserves rose by $1.701 billion to a lifetime high of $473 billion in the week to February 7 on account of increase in foreign currency assets. But traders turned pessimistic and key gauges entered into red terrain as some cautiousness crept in with the commerce ministry’s data showing that the country's exports contracted for the sixth month in a row by 1.66% in January to $25.97 billion. Imports too declined by 0.75% $41.14 billion, leaving a trade deficit of $15.17 billion during the month under review. Markets extended losses in second half of the trade as sentiments remained dampened on report that Global rating agency Moody’s said that India’s economic recovery is likely to be shallow and expand at a slower pace of 5.4 per cent in Calendar 2020 than the earlier estimate of 6.6 per cent. Traders were eyeing the outcome of Finance Minister Nirmala Sitharaman’s press conference. Nirmala Sitharaman’s is holding an interactive session with trade and industry representatives, intellectuals, influencers, economics professors, professionals on Budget 2020 in Bengaluru today. Adding to the worries, the data showed that investments in the Indian capital market through participatory notes (P-notes) continue to decline and hit a nearly 11-year low of Rs 64,537 crore till the end of December 2019. Finally, the BSE Sensex lost 202.05 points or 0.49% to 41,055.69, while the CNX Nifty was down by 67.65 points or 0.56% to 12,045.80.