Markets to extend losses with gap-down opening on Friday; GDP data eyed

Indian markets recovered from day’s lows but settled below neutral lines on Thursday amid growing concerns of the novel coronavirus infection spreading outside China. Today, the markets are likely to extend their losing streak with gap-down opening following heavy sell-off in the global markets as coronavirus worries mounted. Infections topped 2,000 in South Korea. Japan has about 200 confirmed cases of the pneumonia-causing virus, excluding those that erupted on the Diamond Princess. Industry body PHDCCI said that the coronavirus outbreak may negatively impact global growth by 30 basis points or $250 billion. On the domestic front, there will be some cautiousness with the Association of Indian Forging Industry’s (AIFI) statement that disruption in supplies due to the coronavirus outbreak in China has hit domestic forging industry along with automobile and auto component manufacturing sectors. Investors also await the GDP numbers for the third quarter of FY20 to be released later in the day. Rating agency ICRA expects the growth of the Indian GDP and the gross value added (GVA) at basic prices in year-on-year (Y-o-Y) terms to rise mildly to 4.7% and 4.5%, respectively, in Q3 FY2020, from 4.5% and 4.3%, respectively, in Q2 FY2020. Though, traders may take note of the Chief Economic Adviser (CEA) to the Narendra Modi government Krishnamurthy V Subramanian’s statement that the slowdown in the economy that has lasted for 13 quarters as part of a business cycle. He expressed hope that the economic slowdown is bottoming out and the recovery is not too far ahead. There will be some buzz in the sugar stocks with a private report that sugar exports from India are likely to pick up with Indonesia showing interest in importing 1.3 million tonnes by May. Metal stocks will be in focus as India Ratings and Research (Ind-Ra) revised its outlook on the steel sector from stable-to-negative to negative for FY2021-21. The revision has been made seeing the steel demand growth expectations of 5 per cent and margin pressures led by iron ore price risks. There will be some reaction in aviation stocks with ICRA’s report that the outlook for India's aviation industry remains negative in the wake of coronavirus outbreak, which has resulted in many international passengers cancelling their travel to South East Asian countries.

The US markets ended lower on Thursday amid investors’ fears that global efforts to contain the spread of the coronavirus were failing. Asian markets are trading in red in early deals on Friday as fears about the novel coronavirus continue to spur a global sell-off.

Back home, weakness persisted over the Dalal Street for the 5th straight day on Thursday, amid rising fears of the coronavirus outbreak. After a negative start, indices remained lackluster throughout the day, amid a private report that the Gross Domestic Product (GDP) growth will stay flat at 4.5 per cent in the October-December 2019. It also said that India faces the risk of getting impacted by coronavirus epidemic economically because of its high reliance on Chinese imports for various goods. Traders also remained cautious with reports that foreign institutional investors sold equities worth Rs 3,336.60 crore on February 26, however domestic institutional investors bought shares worth Rs 2,785.67 crore on the same day. However, in the second half of the trading day, key benchmarks trimmed most of their losses to end the session off day’s low points. Recovery in the markets was on the back of the Finance Minister Nirmala Sitharman’s statement that the government is keeping a close watch on the impact of coronavirus outbreak on the Indian economy and various options are being gauged at various levels. Some support also came amid reports that India added more than three dollar billionaires every month in 2019, taking the tally to 138 that has helped the country to feature at the third position globally. China and the US occupied the first and second spot with 799 and 626 billionaires, respectively. Finally, the BSE Sensex slipped 143.30 points or 0.36% to 39,745.66, while the CNX Nifty was down by 45.20 points or 0.39% to 11,633.30.