Benchmarks to get slightly positive start on Tuesday

Indian markets plummeted on Monday as worries about the impact of coronavirus on domestic as well as the global economy grew stronger. Today, the start of session is likely to be slightly positive amid sharp fall in crude oil prices. Traders will be taking encouragement with Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that RBI has many provisions to provide cushion to the sagging economy, however, that will completely depend on the circumstances. The RBI has announced two key measures that the central bank will take to improve the liquidity condition of the Indian economy and financial markets. The RBI will conduct another 6-month dollar/rupee swap on March 23 later this month along with conducting Long-Term Repo Operations (LTRO) of up to Rs 1 lakh crore at the policy rate in multiple tranches. Das noted that the government has been on a war-footing, taking necessary steps to prevent the spread of COVID-19. Though, there may be some cautiousness as the number of cases worldwide continue to pile up, with 114 cases in India. Traders may also be concerned with Care Ratings’ report that corporate India is expecting a 0.5% hit on economic growth in FY2020-21 if the coronavirus pandemic lasts longer, pushing up fiscal deficit and creating more bad loans for the bank. Meanwhile, capital markets regulator SEBI has proposed to exempt a listed company from following delisting regulations in case of its merger with a listed holding firm, if the shareholders of the subsidiary entity gets shares of the parent. Aviation stocks will be in focus with a private report that the coronavirus pandemic will bankrupt most airlines worldwide by the end of May unless governments and the industry take coordinated steps to avoid such a situation. There will be some reaction in power stocks with report that reversing the trend witnessed in the first two months of 2020, power demand has recorded a negative growth in the first half of March.

The US markets ended deeply in red on Monday after unprecedented steps taken by the Federal Reserve, lawmakers and the White House to slow the spread and blunt the economic hit of the coronavirus failed to restore order to markets. Asian markets are trading mostly lower on Tuesday following overnight sell-off on Wall Street.

Back home, Bears made a strong comeback over the Dalal Street on Monday, with the Sensex and Nifty ending the session lower by around 8 percent each. The start of the day was weak, amid CRISIL’s report that credit pressures have intensified on India Inc as the coronavirus spread deepens in India and across the globe. It warned that Airlines, hotels, malls, multiplexes and restaurants will be the worst hit businesses. Traders also got worried, with a report that foreign portfolio investors (FPIs) have withdrawn a whopping Rs 37,976 crore on a net basis from the Indian markets in March so far amid the coronavirus pandemic triggering fears of a global recession. Weakness persisted over key equity markets throughout the trading day, even after India’s Wholesale price index (WPI) inflation eased sharply to 2.26 percent for the month of February, 2020 as compared to 3.1 percent for the previous month and 2.93 percent during the corresponding month of the previous year. Market participants overlooked the Commerce Ministry’s data report showing that India's exports rose for the first time in seven months in February growing by 2.91 percent to $27.65 billion. Besides, imports too grew by 2.48 percent to $37.5 billion, leaving a trade deficit of $9.85 billion as against $9.72 billion in February 2019. Finally, the BSE Sensex slipped 2713.41 points or 7.96% to 31,390.07, while the CNX Nifty was down by 757.80 points or 7.61% to 9,197.40.