Benchmarks to make gap-down opening on Monday

Indian markets ended sharply lower on Friday amid selling across the board as a spreading coronavirus stoked fears of a prolonged economic slowdown. Today, the start of new week is likely to be gap-down following sell-off in the global markets amid coronavirus fears. Traders will be concerned with credit rating agency Moody's statement that the coronavirus has increased the risk of a global recession this year. It added that advanced economies including the United States, Japan, Germany, Italy, France, Britain and Korea could all fall into recession in an adverse scenario. Some cautiousness will come with report that snapping their six-month buying streak, FPIs pulled out a net Rs 13,157 crore from the Indian capital markets in the first five trading sessions of March as the coronavirus outbreak spooked investor sentiment. However, some respite may come later in the day as oil prices plunged nearly 21% in early trade on Monday after Saudi Arabia slashed its official selling price. Some encouragement may also come with the latest Reserve Bank of India’s (RBI) data showing that the country's foreign exchange reserves swelled by $5.42 billion to a lifetime high of $481.54 billion in the week to February 14, on the back of rise in foreign currency assets. In the previous week, the foreign exchange reserves had increased by $29 million to $476.12 billion. Also, some support may come with report that investments through participatory notes (P-notes) in the domestic capital market rose marginally to Rs 67,281 crore at the end of January 2020. Investments increased after hitting a nearly 11-year low at the end of December 2019 when the total value of P-note investments in Indian markets -- equity, debt, and derivatives -- stood at Rs 64,537 crore. Traders may take note of NITI Aayog CEO Amitabh Kant’s statement that technology in sunrise sectors will have to be the key for the country to achieve 9-10 per cent growth. There will be some buzz in the banking stocks as allaying concerns over banking sector health in the wake of Yes Bank fiasco, Chief Economic Adviser Krishnamurthy Subramanian said Indian banks are well capitalised and there is no reason to worry. He further said that it is a wrong method to assess a lender's health based on the ratio of deposit to m-cap (market capitalisation). There will be some reaction in IT stocks with former NASSCOM President R Chandrashekar’s statement that India's information technology (IT) services sector is facing adverse impact on the operational front following the outbreak of coronovirus in several countries.

The US markets ended in red on Friday as the coronavirus outbreak kept investors on edge. Asian markets are trading lower in early deals on Monday as panicked investors fled to bonds to hedge the economic shock of the coronavirus.

Back home, Indian equity bourses witnessed huge losses on last trading day of the week, with Senses & Nifty ending lower by over 2%. After weak start, indices remained in red, impacted with S&P Global Ratings’ report that a fast spreading coronavirus outbreak could knock $211 billion off the combined economies of the Asia-Pacific, with Japan, Hong Kong, Singapore and Australia among the most exposed. Adding worries over the street, the Reserve Bank of India superseded the board of Yes Bank and imposed a 30-day moratorium on it in the absence of a credible revival plan amid a serious deterioration in its financial health. Weakness persisted during the whole trading day, after domestic rating agency CRISIL said that the troubled non-bank lenders' segment is defying caution and growing the riskier unsecured loans portfolio at a pace of 25 per cent in the current fiscal. It also said that a rising propensity for personal loans and attractive risk-adjusted returns are the possible reasons driving the non-banking finance companies (NBFC) to grow on such loans. Traders overlooked Reserve Bank governor Shaktikanta Das’ assurance that the central bank will take every measure needed to secure the economy against the challenges arising from the coronavirus epidemic. Finally, the BSE Sensex lost 893.99 points or 2.32% to 37,576.62, while the CNX Nifty was down by 279.55 points or 2.48% to 10,989.45.