Post Session: Quick Review

Reversing previous session’s healthy gains, Indian equity indices ended volatile day of trade on lower note on Thursday, tracking tepid cues from global markets and foreign fund outflow. Key equity indices traded flat with negative bias in morning deals, as traders remained cautious with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that the coronavirus outbreak will have a limited impact on India but the global GDP and trade will definitely get affected due to the large size of the Chinese economy. He added that only a couple of sectors in India are likely to see some disruptions but alternatives are being explored to overcome those issues. Investors also remained on sidelines and awaited more clarity on U.S. President Donald Trump’s statement ahead of his visit to India that the two countries were working on a major trade deal. Trump has said that he was not sure if the trade deal with India would be completed before the US presidential election in November.

However, Markets witnessed some buying in afternoon session, as sentiments turned optimistic with report that the Cabinet Committee on Economic Affairs (CCEA) approved a new central sector scheme ‘Formation and Promotion of Farmer Produce Organizations (FPOs)’ to form and promote 10,000 new FPOs in five years period from 2019-20 to 2023-24 with budgetary support of Rs 4,496 crore as part of its efforts to cut production cost and boost income of farming community. But, markets failed to hold recovery and once again slipped into negative territory in late trade, as traders got wary with Fitch Ratings’ report stating that with deceleration in growth and tight liquidity conditions, the country's financial institution sector may continue to face challenging operating environment.

On the global front, Asian markets ended mixed on Thursday, while European markets were trading mostly in red, on fears about the global impact of the coronavirus outbreak after research suggested it was more contagious than previously thought. Back home, Pharma stocks were in focus as the Niti Aayog held a meeting with the captains of industry in the pharmaceutical sector to discuss the impact of disruption in supplies of active pharmaceutical ingredients (APIs) following the coronavirus outbreak in China. Paper industry stocks also were in focus as the government is considering making it mandatory for paper importers to register themselves before importing the commodity, a move aimed at keeping a tab on imports of the product.

The BSE Sensex ended at 41167.60, down by 155.40 points or 0.38% after trading in a range of 41134.31 and 41399.93. There were 12 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.46%, while Small cap index was up by 0.55%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 0.98%, Power up by 0.63%, PSU up by 0.57%, Bankex up by 0.35% and Telecom up by 0.33%, while Energy down by 0.90%, IT down by 0.80%, Oil & Gas down by 0.76%, TECK down by 0.66% and Consumer Durables down by 0.64% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Indusind Bank up by 3.68%, SBI up by 2.61%, Tata Steel up by 2.54%, Power Grid up by 1.68% and ONGC up by 1.18%. (Provisional)

On the flip side, Asian Paints down by 2.45%, Hindustan Unilever down by 1.91%, TCS down by 1.76%, Nestle down by 1.47% and Tech Mahindra down by 1.43% were the top losers. (Provisional)

Meanwhile, easing concerns over coronavirus outbreak, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said that it will have a limited impact on India but the global Gross Domestic Product (GDP) and trade will definitely get affected due to the large size of the Chinese economy. He added that only a couple of sectors in India are likely to see some disruptions but alternatives are being explored to overcome those issues. The deadly virus has brought a large part of the world's second-largest economy China to a standstill and its impact has been felt across industries.

The Governor said the country’s pharmaceutical and electronic manufacturing sectors are dependent on China for inputs and they may be impacted. He also said it is definitely an issue which needs to be closely monitored by every policymaker whether in India or any other country. Every policymaker, every monetary authority needs to keep a very close watch. So coronavirus issue needs to be closely watched. He said a similar problem, perhaps on a lower scale, occurred last time during the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003, and added that the Chinese economy had slowed down by about 1% during that time.

Das said for India, China is an important trading partner and policymakers both in the government and the monetary authority are very watchful of the developments that are taking place. He further said if the Chinese authorities are able to contain the problem, the impact on the global economy and on India will be minimised. On the impact on India, he said the pharmaceutical sector is sourcing raw materials from China. Most of the large pharma companies, according to information that we have, always keep stock for three-four months.

Therefore, he said they should be able to manage and also those provinces from where these pharma intermediates are sourced have not been impacted by the virus outbreak. Therefore, he said there is an expectation that the supply of pharma raw materials will be maintained. He noted that India exports iron ore to China and it could be impacted. He said but in economics, something negative in one place always works positive elsewhere. So if your iron ore exports are impacted, then perhaps the raw material supply to local domestic steel manufacturers will be at reduced costs. So their cost of production may go down.

The CNX Nifty ended at 12083.70, down by 42.20 points or 0.35% after trading in a range of 12071.45 and 12152.00. There were 21 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indusind Bank up by 3.31%, Zee Entertainment up by 3.23%, Tata Steel up by 2.49%, SBI up by 2.33% and Power Grid up by 1.23%. (Provisional)

On the flip side, Cipla down by 2.39%, Asian Paints down by 2.12%, Hindustan Unilever down by 1.80%, TCS down by 1.79% and Indian Oil Corp. down by 1.58% were the top losers. (Provisional)

European markets were trading mostly in red; France’s CAC decreased 9.16 points or 0.15% to 6,102.08 and Germany’s DAX fell 25.49 points or 0.18% to 13,763.51, while UK’s FTSE 100 was up by 7.58 points or 0.1% to 7,464.60.

Asian markets ended mixed on Thursday as worries remained over the global economic impact from the corona virus outbreak. New cases in China slowed again with just 394 new cases from the previous day. Still, China has reported 74,576 total cases, with 2,118 deaths. Meanwhile, rise in corona virus cases in South Korea and Japan, offsetting hopes of further stimulus in China. Chinese stocks ended up after Chinese Central Bank (PBOC) cut its benchmark one-year loan prime rate by 10 basis points and the five-year loan prime rate by 5 basis points, as anticipated, adding to a slew of fiscal and monetary measures in recent weeks aimed at mitigating the economic damage. Further, Japanese stocks closed higher as a sharp sell-off in the yen helped lift exporters.