Markets trade higher in early deals; Yes Bank up 32%

Indian equity benchmarks made slightly positive start on Tuesday amid sharp fall in crude oil prices overnight. Soon markets turned volatile but are trading firm with gains of around half a percent each in early deals. Sensex and Nifty reclaimed their crucial 31,500 and 9,250 levels, respectively. Buying in Metal, Energy and Healthcare counters supported the domestic indices. Traders took 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. Though, upside remained capped 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.

Also, global cues remained lackluster with Asian markets trading mixed following sell-off overnight on Wall Street amid escalating concerns about the economic impact of the coronavirus pandemic. Despite recent stimulus measures announced by global central banks, investors fear that the impact of the COVID-19 outbreak would still be heavy and push the global economy into a recession.

Back home, telecom stocks were buzzing after the government appealed to the Supreme Court to allow telecom companies to pay adjusted gross revenue (AGR) over 20 years. In scrip specific development, Yes Bank traded higher after Moody's upgraded the bank's ratings by a notch. In another development, RBI Governor Shaktikanta Das said that deposits in the cash-strapped private sector lender were safe.

The BSE Sensex is currently trading at 31520.52, up by 130.45 points or 0.42% after trading in a range of 30745.19 and 31831.63. There were 20 stocks advancing against 9 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.49%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Metal up by 2.50%, Energy up by 2.34%, Healthcare up by 2.11%, PSU up by 1.84%, Telecom up by 1.58%, while Consumer Durables down by 0.26%, Realty down by 0.08% were the only losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 5.40%, Tata Steel up by 3.95%, ONGC up by 3.91%, Indusind Bank up by 3.83% and HCL Technologies up by 3.30%. On the flip side, HDFC down by 1.22%, HDFC Bank down by 1.17%, Titan Company down by 1.13%, Kotak Mahindra Bank down by 0.81% and Larsen & Toubro down by 0.31% were the top losers.

Meanwhile, amid coronavirus outbreak across the country, Care Ratings in its latest survey report has said 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. The rating agency has conducted a survey on the impact of the coronavirus pandemic on the economy among over 150 CEOs, CFOs, investors, analysts and other stakeholders from manufacturing, financial services, infra, realty and services between March 5 and 12.

As per the survey, the economic impact will be significant and long term if the virus continues for longer. A vast majority (52%) of those polled say the Gross Domestic Product (GDP) will come down by around 50 bps, while 22% expected the hit to over 1% in FY21, forcing the Reserve Bank of India (RBI) to respond by reducing the repo rate by 25-50 bps sooner than later. Survey respondents also fear a widening of the fiscal deficit if the government announces fiscal measures to support the economy with 70% expecting widening of the fiscal deficit to the tune of 0.25% in FY21.

Significantly, as much as 80% opine that the NPA levels in the banking sector are going to increase owing to the outbreak across. While the hospitality, tourism and aviation will be hit hard, pharma and healthcare will benefit from pandemic. As much as 23% of the respondents see hospitality and tourism getting hit badly due to the adverse impact of the outbreak of coronavirus followed by airlines (11%) and auto and auto ancillary (9%). Some of the other industries which are expected to benefit apart are retail and e-commerce (4%), BFSI (3%), infrastructure (3%), capital goods (3%) and auto and auto ancillary (3%) among others. Impact on exports, 58% opine that the pandemic will hit exports 42% believe it will lead to a contraction in FY21 and 78% respondents also expect imports also to contract further.

The CNX Nifty is currently trading at 9261.20, up by 63.80 points or 0.69% after trading in a range of 9016.85 and 9314.60. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 32.21%, Sun Pharma up by 5.10%, Adani Ports & SEZ up by 4.42%, Tata Steel up by 4.14% and HCL Technologies up by 4.08%. On the flip side, UPL down by 3.21%, Bharti Infratel down by 2.03%, Zee Entertainment down by 1.83%, Bajaj Finserv down by 1.30% and HDFC down by 1.29% were the top losers.

Asian markets were trading mixed; Straits Times trembled 13.32 points or 0.53% to 2,482.45, KOSPI fell 22.97 points or 1.34% to 1,691.89, Taiwan Weighted dropped 197.24 points or 2.03% to 9,520.53, Jakarta Composite lost 210.34 points or 4.48% to 4,480.32. On the flip side, Hang Seng increased 242.91 points or 1.05% to 23,306.48, Nikkei 225 surged 127.10 points or 0.75% to 17,129.14, Shanghai Composite was up by 0.75 points or 0.03% to 2,790.00.