Benchmarks likely to make flat-to-positive start on Tuesday

Indian markets wiped out all of their early gains and ended lower with cut of around half a percent each on Monday after two people from Delhi and Telangana tested positive for the coronavirus. Today, the benchmarks are likely to make flat-to-positive start following gains in global markets. Some support will also come with Union Finance Minister Nirmala Sitharaman’s statement that the direct tax dispute resolution scheme announced in Budget will be of great help to people as they will be able to save time and money spent in fighting cases. Though, sharp rise in crude oil prices may keep gains in check. Traders may be concerned as The Organisation for Economic Cooperation and Development (OECD) lowered India’s GDP growth forecast to 5.1%, from its earlier projection of 6.2%, for 2020 on concerns over the impact of deadly coronavirus on the domestic as well as the global economy. There will be some cautiousness as the National Statistical Office’s (NSO) data showed that as the economy grapples with a prolonged slowdown, close to Rs 10.52 lakh crore of the corporate debt is at the risk of default over the next three years. Besides, the finance ministry has said that the central GST authorities have detected evasion of Rs 70,206 crore between July 1, 2017 launch of GST and January, 2020. There will be some buzz in the banking stocks with report that Public Sector Banks (PSBs) may end the current fiscal year 2019-20 on a positive note after registering a profit in the three quarters so far. Gems and jewelry stocks will be in focus with Crisil Ratings’ report that the country’s diamond exports could shrink by a fifth to $19 billion by the end of 2020-21, as the novel coronavirus (n-CoV) outbreak amplifies sluggishness in global demand. There will be some reaction in sugar stocks with ICRA’s report that higher-than-anticipated exports and lower production for the SY2020 (sugar year 2019-2020) season are likely to support domestic sugar prices. On expectations of a global deficit, sugar prices have risen from $313/MT in August 2019 to $388/MT in January 2020.

The US markets ended sharply higher on Monday as investors grew optimistic that the Federal Reserve and other central banks would soon intervene to limit the economic impact from the spread of the novel coronavirus. Asian markets are trading in green in early deals on Tuesday tracking overnight gains on Wall Street.

Back home, Indian equity benchmarks ended lower on Monday for the seventh straight day, as detection of fresh coronavirus cases in the country spooked domestic investors. After a firm start, indices remained in green for the most part of the session, as the government collected Rs 1.05 lakh crore as Goods and Services Tax (GST) revenue in February, up 8% over the same month last year. Adding some relief among market participants, the growth of India's eight core sectors improved to 2.2% in January 2020 against 1.5% in the same month last year, helped by expansion in the production of coal, refinery products and electricity. But, indices slipped into red in the last hour of trade, as Fitch Solutions cut its forecast for India's economic growth to 4.9 per cent in the current fiscal that ends March 31, saying manufacturing could come under pressure from weak domestic demand and supply chain disruptions due to the coronavirus outbreak. The GDP growth is forecast to recover slightly to 5.4 per cent in 2020-21 (April 2020 to March 2021). Besides, the Controller General of Accounts data showed that India's fiscal deficit touched 128.5 percent of current financial year budget target at January-end. The deficit during the same period of FY19 was 121.5 percent. Finally, the BSE Sensex slipped 153.27 points or 0.40% to 38,144.02, while the CNX Nifty was down by 69.00 points or 0.62% to 11,132.75.