Markets to get pessimistic start of F&O series expiry week

Indian markets ended higher on Friday, after four sessions of heavy losses, as governments and central banks around the world announced a raft of stimulus and support measures to deal with the coronavirus outbreak. Today, the start of the crucial F&O series expiry week is likely to be pessimistic tailing weak global cues. Fast spreading coronavirus likely to weigh down on sentiments. The coronavirus (Covid-19) positive cases surged in India on Sunday to 396 -- the highest increase of 81 over 24 hours so far. Also, three more coronavirus deaths were reported from Mumbai, Bihar and Gujarat. This takes the total number of deaths in India to seven. Moreover, Section 144 was imposed with effect from 9 pm on March 22 to midnight of March 31. This is to prevent any gatherings of more than five people. There will be some cautiousness with report that the large amount of selling by foreign institutional investors for nearly a month due to recession fears after rapid wide-spreading novel coronavirus in Europe and United States was one of the biggest reasons for equity market correction. FIIs net sold Rs 20,908 crore worth of shares in the week ended March 20, taking the total to Rs 51,243 crore in March so far. It was the biggest ever monthly outflow. Separately, the Reserve Bank of India’s (RBI) data showed that the country's foreign exchange reserves fell for the first time in almost six months to $481.89 billion in the week ended March 13, after touching a record high of $487.23 billion. However, some respite may come later in the day as the RBI will inject liquidity of Rs 30,000 crore through open market operations (OMOs) on March 24 and March 30 to maintain financial stability in the system in the wake of the coronavirus outbreak. Meanwhile, to mitigate the impact of coronavirus outbreak on the economy, India Inc has sought a host of measures, including a year-long moratorium by banks on debt repayment, tax cuts and fiscal stimulus amounting to Rs 2 lakh crore to needy citizens through Aadhaar-based direct benefit transfer. Besides, Finance minister Nirmala Sitharaman could announce measures to deal with the economic impact of Covid-19 in her reply to the Finance Bill on Monday. There will be some buzz in the insurance stocks with the Insurance Regulatory and Development Authority of India (Irdai) data showing that non-life insurance firms reported a 14% increase in the premium collection to Rs 1.73 trillion during April-February this financial year. There will be some reaction in cement stocks with a private report that even though the ongoing temporary shutdown in the wake of Covid-19 has impacted construction activities across the country resulting in a decline in cement uptake, the hit on domestic demand is transient.

The US markets ended sharply lower on Friday as investors remained jittery about the direction of the economy despite hopes for government and central bank action to combat the coronavirus pandemic. Asian markets are trading mostly in red on Monday as a rising tide of national lockdowns threatened to overwhelm policymakers' frantic efforts to cushion what is likely to be a deep global recession.

Back home, Indian equity markets took breather on Friday after four days of selloff, with Sensex and Nifty ending higher by around 6% each. Indices made a cautious start of the day, as CRISIL slashed the country’s economic growth forecast by 50 Basis points (bps) to 5.2 percent for fiscal year 2020-21 (FY21) as against earlier forecast of 5.7 percent expansion as the longer Covid-driven shutdowns will further roil the already weak economy. But, markets soon staged recovery, after Prime Minister Narendra Modi’s announcement of setting up of a 'COVID-19 Economic Response Task Force' to decide on relief package for sectors hit by the coronavirus outbreak. Key Indices extended their gains in late afternoon deals, tracking firm global markets. Market participants were seen taking a note of the Federation of Indian Chambers of Commerce and Industry’s (FICCI) statement that there is an urgent need to take immediate steps to contain the spread of coronavirus and address key pain areas of the industry which can help in minimising its impact on Indian economy and businesses. The street overlooked a report that Fitch Ratings cut India growth forecast to 5.1 per cent for FY 2020-21, saying supply chain disruptions in the wake of coronavirus outbreak are likely to hit investment and exports. Finally, the BSE Sensex gained 1627.73 points or 5.75% to 29915.96, while the CNX Nifty was up by 482.00 points or 5.83% to 8745.45.