Markets end lower for second straight day

03 Apr 2020 Evaluate

Indian equity benchmarks continued their southward journey for the second straight trading session and ended near day's low on Friday, as investors were still on the back foot amid the rising cases of the coronavirus pandemic in the country. After making cautious start, key indices fell deeply in red, as traders were concerned with private survey stating that India's manufacturing activity expanded at its slowest pace in four months in March and is likely to get worse as demand and output take a hit from the coronavirus outbreak, putting a severe dent in business optimism. The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, declined to 51.8 in March from February's 54.5, its lowest since November but still above the 50-mark that separates growth from contraction for a 32nd month. Some cautiousness also came as Fitch Solutions stated that India's fiscal deficit in 2020-21 may shoot up to 6.2% of the GDP from 3.5% government estimate as a fallout of the Covid-19 economic stimulus package.

Markets continued weak run in late hour of trade, as the Asian Development Bank (ADB) said that India's economic growth is likely to slow down to 4 per cent this fiscal on the back of the current global health emergency. Adding some pessimism, the Ministry of Finance in its latest data has showed that Goods and Services Tax (GST) collections in March 2020 slipped below the psychological Rs 1 lakh crore-mark for the first time in four months to Rs 97,597 crore as COVID-19 lockdown that shut most businesses compounded tax collection woes in an already sluggish economy. The street overlooked report that Industry body ASSOCHAM urged the government to roll out a $100-120 billion stimulus package to help revive all sectors of the economy, which has been battered by the coronavirus outbreak and the subsequent nationwide lockdown.

On the global front, Asian markets ended mostly lower on Friday, as coronavirus cases around the world soared past one million and oil prices shed some of their massive gains. European markets were trading in red a survey showed euro zone business activity collapsed in March as attempts to contain the coronavirus pandemic pushed governments across the continent to shut down vast swathes of their economies, from shops to factories to restaurants. The pandemic has infected more than a million people worldwide, paralysing economies as consumers worried about their health and job security stay indoors and rein in spending. Back home, auto stocks ended lower with a private report stating that the country’s automobile sales are down by an average 64% as all manufacturing plants have been shut since the lockdown announced on March 24.

Finally, the BSE Sensex lost 674.36 points or 2.39% to 27,590.95, while the CNX Nifty was down by 170.00 points or 2.06% to 8,083.80.  

The BSE Sensex touched high and low of 28,639.12 and 27,500.79, respectively and there were 8 stocks advancing against 22 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.17%, while Small cap index was down by 1.03%.

The gaining sectoral indices on the BSE were Healthcare up by 3.56%, Oil & Gas up by 2.03%, Utilities up by 0.86%, FMCG up by 0.84%, Telecom up by 0.73% while, Bankex down by 5.39%, Auto down by 2.94%, IT down by 2.85%, Consumer Disc down by 2.54%, Basic Materials down by 2.49% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 9.42%, ITC up by 6.88%, ONGC up by 6.24%, Mahindra & Mahindra up by 3.03% and Tech Mahindra up by 1.85%. On the flip side, Axis Bank down by 9.16%, Indusind Bank down by 8.49%, ICICI Bank down by 8.01%, Titan Company down by 7.90% and SBI down by 5.92% were the top losers.

Meanwhile, rating agency ICRA in its latest report has warned that the asset quality pressure for banks and Non-bank financial companies (NBFCs) is expected to increase in the current financial year (FY21) as slower economic activity amid the coronavirus pandemic may affect debt servicing capabilities of borrowers. It noted that the spike in reported non- performing assets (NPAs) would be reflected over the next few quarters. As per ICRA’s estimates, the country’s Gross Domestic Product (GDP) growth is expected to slow down to 2 percent during FY21 from estimates of 4.4 percent in FY20.

According to the report, the actual increase in the quantum of NPAs for banks and NBFCs will be known after some more days. It said recently, the Reserve Bank of India (RBI) gave a relief package for retail borrowers and businesses by announcing a three-month moratorium on payment of all term loans falling due between March 1, 2020 and May 31, 2020. It expects the asset quality stress is likely to reflect with a lag of 1-2 quarters post the removal of the moratorium and the stress will vary across segments. In case of banks, it said NPA generation will increase as compared to an earlier expectation of moderation in bad loans.

The rating agency further said that credit costs to remain elevated and recoveries will get pushed back for banks. It also said the gross slippage rate for state-owned banks is likely to be 4.5-5 percent and the provision coverage ratio (PCR) may decline to 57-60 percent. It noted that the solvency profile of PSBs will weaken to 53-57 percent from current level of 51 percent. It added that private sector banks are likely to see gross slippage rate of 4-5 per cent and a fall in PCR to 60-62 per cent in the current fiscal.

The CNX Nifty traded in a range of 8,356.55 and 8,055.80 and there were 19 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 9.58%, Cipla up by 8.28%, ITC up by 6.67%, GAIL India up by 6.60% and ONGC up by 6.16%. On the flip side, Axis Bank down by 8.85%, Indusind Bank down by 8.33%, ICICI Bank down by 7.44%, Titan Company down by 7.06% and Shree Cement down by 6.34% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 73.52 points or 1.34% to 5,406.70, France’s CAC fell 52.76 points or 1.25% to 4,168.20 and Germany’s DAX was down by 64.49 points or 0.67% to 9,506.33.

Asian markets ended mostly lower on Friday as worries about the economic costs of the corona virus hurt global equity markets, and after oil prices shed some of their massive gains. The number of confirmed corona virus cases around the world has soared past one million and deaths have topped 50,000 as the United States reported the highest daily death toll of any country so far. Chinese shares ended lower amid fear of a potential second wave of infections in the country. In its latest growth outlook, the Asian Development Bank (ADB) lowered its 2020 GDP growth forecast for China, where the virus surfaced in December, to 2.3% this year from 5.8% previously, citing dismal economic activity in the first two months of the year. Though, Japanese shares ended marginally higher, helped by a weaker yen and overnight gain in oil prices on hopes the oil price war between Russia and Saudi Arabia could soon ease.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,763.99
-16.65
-0.60

Hang Seng

23,236.11
-43.95
-0.19

Jakarta Composite

4,623.43
91.74
2.02

KLSE Composite

1,330.65

-0.25

-0.02

Nikkei 225

17,820.19
1.47
0.01

Straits Times

2,389.29
-63.74
-2.60

KOSPI Composite

1,725.44
0.58
0.03

Taiwan Weighted

-

-

-



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