Indian markets ended highly volatile session in red on Wednesday as rising cases of deadly coronavirus in the country dampened investors’ sentiment. Today, the markets are likely to make flat-to-positive start following global peers after the International Monetary Fund (IMF) announced a $50 billion aid package on Wednesday to combat the impact of the coronavirus. Some encouragement will come as Reserve Bank of India (RBI) governor said he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed. He added that for India, options include a rate cut and supporting the market through liquidity measures. Some support will also come with report that the Union Cabinet has approved 72 changes to the Companies Act 2013, with a thrust on decriminalising compoundable offences and allowing direct foreign listing for domestic companies to boost Brand India. However, some cautiousness may come with IMF chief Kristalina Georgieva’s statement that the new coronavirus epidemic poses a serious threat to people and the world economy, and will slow growth below the 2.9% posted last year. Traders may take note of Chief Economic Adviser K V Subramanian’s statement that the country need far more competition to come into business to accelerate growth, as the evidence from the past shows that wealth creation and growth has accelerated after the market was opened up. Meanwhile, Union Finance Minister Nirmala Sitharaman has said the Cabinet has approved 72 changes amending 65 sections of the Companies Act, to decriminalize these sections. There will be some buzz in the metal stocks with a private report stating that steel mills in India are gearing up for an increase in demand from overseas buyers as the coronavirus outbreak chokes supplies from China. Banking stocks will be in focus after the Union Cabinet gave its go-ahead for the merger of ten public sector banks. There will be some reaction in textile stocks as ratings agency ICRA said it is maintaining negative outlook on the cotton spinning sector amid uncertainty over the extent and duration of the coronavirus outbreak. Telecom stocks may also in limelight after reports that the Department of Telecommunications has ordered Vodafone Idea, Bharti Airtel and other telecom operators to immediately clear all dues to the government arising from the Supreme Court's October order.
The US markets settled sharply higher on Wednesday as major victories from former Vice President Joe Biden during Super Tuesday sparked a massive rally within the health-care sector. All the Asian markets are trading in green on Thursday after an emergency US spending bill to combat the impact of the coronavirus added to signs of support from policy makers around the world.
Back home, Wednesday turned out to be a disappointing day of trade for Indian equity benchmarks with frontline gauges resuming their southward journey after a day of halt and settled with a cut of over half a percent. Markets started the session on quiet note as traders remained cautious with the government data showing that foreign direct investment (FDI) into India dipped marginally by 1.4% to $10.67 billion (about Rs 76,800 crore) during October-December period of 2019-20. Inflow of FDI during October-December of 2018-19 stood at $10.82 billion. Meanwhile, the government has collected over Rs 7.52 lakh crore as direct taxes till January 31 of the current fiscal. Key gauges lost some more ground as traders shrugged off report that the Indian services sector growth jumped to over 7-year high in the month of February 2020, with rise new export orders and strengthening business confidence. The IHS Markit India Services Business Activity Index increased for the fifth successive month in February to 57.5 from 55.5 in January after dipping to a 19-month low in September 2019. The market participants even overlooked Minister of State for Agriculture Kailash Chaudhary’s statement that the government’s target of doubling of farmers' income by the year 2022 will definitely be achieved. He also said that a number of schemes have been launched by the government towards fulfilling this goal. In late trade, markets suddenly collapsed like house of card as coronavirus cases increased in India. Union Health Minister Harsh Vardhan said the number of confirmed cases in India have risen to 28 and the government is readying an action plan. But, decent recovery in last leg of trade helped markets to end off day’s lows as traders opted to buy beaten down but fundamentally strong stocks. Though the recovery was not enough to pull markets into green. Finally, the BSE Sensex slipped 214.22 points or 0.55% to 38,409.48, while the CNX Nifty was down by 52.30 points or 0.46% to 11,251.00.
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