Benchmarks to get gap-down opening; macro-economic data eyed

12 Mar 2020 Evaluate

Indian markets ended marginally in green on Wednesday in choppy trading session as risk sentiment remained subdued amid rising coronavirus cases in the country. Today, the start of session is likely to be gap-down amid sell-off in the global markets as virus fears intensify. As per a private report, two cases of novel Coronavirus, or Covid-19, were confirmed in Mumbai on March 11, marking the first cases for the metropolitan city. Besides, investors will be eyeing macro-economic data of January’s industrial and manufacturing production data and retail inflation for February slated to be released later in the day. Though, some respite may come later in the day with Chief Economic Adviser Krishnamurthy Subramanian’s statement that the virus epidemic will not have much impact on the next fiscal’s economic growth. Some support may also come with a private report that falling crude oil prices will help reduce current account deficit by 25 basis points to 0.7% of the GDP in FY2021. Besides, the Reserve Bank of India’s (RBI) data showed that the central bank continued to be a net purchaser of the US dollar after it bought $10.27 billion in January on a net basis from the spot market. Meanwhile, the GST Council is likely to rationalise tax rates on five sectors, including mobile phones, footwear and textiles, and defer implementation of the new return filing system and e-invoicing in its meeting on March 14. There will be some buzz in the banking stocks as Finance Minister Nirmala Sitharaman will hold meeting with chief executives of amalgamating banks on Thursday to review preparedness for the merger beginning April 1. Auto stocks will be in focus as industry body Society of Indian Automobile Manufacturers (SIAM) warned that disruption in raw material supply due to coronavirus outbreak could critically affect production across all segments. There will be some reaction in jewellery stocks with the Gem and Jewellery Export Promotion Council’s (GJEPC) report that India's gems and jewellery exports declined by 20.26% to Rs 20,763.28 crore in February, hit by the global outbreak of Covid-19, credit crunch and customs issues.

The US markets ended lower on Wednesday after the World Health Organization declared the new coronavirus a pandemic. Asian markets are trading deeply in red on Thursday following overnight fall on Wall Street.

Back home, Indian equity bourses ended slightly higher in highly volatile session on Wednesday. After a weak start, indices altered between green & red terrain, as Moody’s Investors Service cut its growth forecast for India to 5.3% for 2020 from 5.4% estimated earlier, as it expects the coronavirus outbreak to dampen domestic demand globally. In noon deals, markets added gains and remained higher till the end of the session, aided with the Reserve Bank of India’s (RBI) statement that it has received Rs 48,856 crore of bids in the fourth long-term reverse repo operation (LTROs) conducted for an amount of Rs 25,000 crore with a 3-year tenor. But, in dying hours of trade, most of gains got trimmed, after Commerce and Industry Minister Piyush Goyal said that the shutdown of factories in China due to the coronavirus outbreak may affect Indian industries like pharmaceutical, electronics and automobile which import components and raw materials from the neighbouring country. Besides, the UN's trade and development agency said that the coronavirus outbreak could cost the global economy up to $2 trillion this year, warning that shock from the epidemic will cause a recession in some countries and depress global annual growth to below 2.5 percent. Finally, the BSE Sensex rose 62.45 points or 0.18% to 35,697.40, while the CNX Nifty was up by 6.95 points or 0.07% to 10,458.40.

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