Markets to get negative start amid sell-off in global markets

The Indian markets before going for a long weekend posted losses of over one third of a percent amid rising crude oil prices. Markets remained closed on Friday on account of a public holiday. Today, the start of the crucial F&O series expiry week is likely to be negative tracking sell-off in the global markets amid coronavirus outbreak. Market participants will also be looking forward to the Gross Domestic data for the third quarter of current fiscal year (FY20) to be out later in the week. Traders will be concerned as think tank National Council of Applied Economic Research (NCAER) pegged the India’s economic growth for the current fiscal at 4.9%, a tad down from 5% estimated by the National Statistical Office (NSO). There will be some cautiousness with Chief Economic Adviser Krishnamurthy Subramanian’s statement that India has some distance to go in fully shifting from pro-crony to pro-business policies. Though, some support may come later in the day with the IMF's October World Economic Outlook report showing that India became world's fifth largest economy in 2019 in terms of nominal GDP, leapfrogging France and the UK. Some support may also come with the RBI’s data showing that the country's foreign exchange reserves swelled by $3.091 billion to a lifetime high of $476.092 billion in the week to February 14, mainly due to a rise in foreign currency assets. Traders may take note of the Reserve Bank of India (RBI) governor Shaktikanta Das’ statement that the RBI is reviewing the retail inflation targeting framework behind monetary policy decision as well as its effectiveness and also plans to hold stakeholders consultations including with the government in June. Meanwhile, US President Donald Trump and top brass of his administration will kick-start an eagerly awaited tour of India on February 24, a visit expected to significantly ramp up bilateral defence and strategic ties but unlikely to produce tangible outcome in resolving thorny issues like trade tariffs. There will be some buzz in the power stocks with ICRA’s report that the Central Government’s efforts to award coal linkages under its Shakti policy to independent power projects having long-term PPAs on an auction basis will have a positive impact on coal-based power plants. Sugar stocks will be in focus with Care Ratings’ report that sugar exports from India are expected to remain firm in the next few months given the upward trend witnessed by international sugar prices in recent months. There will be some reaction in pharma stocks as rating agency ICRA said that it has revised its outlook on the Indian pharmaceutical industry to negative from stable due to ongoing lockouts in parts of China following the outbreak of coronavirus.

The US markets ended in red on Friday as the spread of the COVID-19 epidemic from China to neighboring countries amplified worries about the impact on supply chains and global economic growth. Asian markets are trading lower in early deals on Monday. Stocks in South Korea plunged after the country raised its coronavirus alert to the highest level following a recent spike in cases throughout the country.

Back home, last trading day of the week closed on lackluster note, with the Sensex and the Nifty ending lower by around 150 and 50 points, respectively. The start of the session was on a cautious note, impacted by 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. In afternoon deals, key benchmarks managed to keep their heads in green terrain for some duration, despite weak cues from the global markets. But, in the last leg of the trade, losses got intensified over the street, amid 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. Traders overlooked a report that the CCEA approved a new central sector scheme ‘Formation and Promotion of Farmer Produce Organizations’ 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. Finally, the BSE Sensex slipped 152.88 points or 0.37% to 41,170.12, while the CNX Nifty was down by 45.05 points or 0.37% to 12,080.85.