Markets to open in red amid weak global cues

Indian markets ended sharply lower on Tuesday, mirroring weak global markets after a historic plunge in oil prices underscored deep economic ructions from the coronavirus pandemic. Today, the markets are likely to extend previous session’s losses with negative start amid weakness in the global markets. Traders will be concerned with a survey by FICCI-Dhruva showing that as many as 72 percent of businesses surveyed as part of a report said they expect to see a high or very high impact from the coronavirus pandemic and the steps taken to counter it. Also, ASSOCHAM-Primus Partners' joint survey showed that economic stress on the industry arising out of the nationwide lockdown forced by the Covid-19 health emergency is expected to last well beyond one quarter. There will be some cautiousness with Moody's report that the loan moratorium extended by regulators in countries like India and China to deal with the liquidity crunch amid COVID-19 crisis will provide temporary relief to borrowers, but will constrain banks from taking proactive recovery actions and could lead to an even greater build-up of credit losses once the moratoriums are lifted. Though , some support may come later in the day as the government advised banks to extend the interest subversion (IS) and prompt repayment incentive (PRI) benefit to all the farmers whose accounts become due during March 1 to May 31 period.   Traders may take note of report that the Reserve Bank of India (RBI) has increased the short-term borrowing capacity of the central government by over 65% to temper market fears that excessive borrowing by the government to fight Covid-19 could put pressure on interest rates. Aviation stocks will be in focus with report that the International Air Transport Association (IATA) said domestic air traffic is down 70% globally and the recovery over the coming six months is likely to be slow due to the damage coronavirus has done to economic conditions. There will be some reaction in gold related stocks with ICRA’s report stating that the widened outbreak of coronavirus (COVID-19) and the subsequent lockdown ahead of the critical Akshaya Tritiya season is a credit negative for the gold jewellery retail industry in the short-term. There will be some result announcements to keep the markets in action.

The US markets settled in red on Tuesday amid continued concerns about yesterday's historic nosedive by crude oil prices weighed on Wall Street. Asian markets are trading mostly lower on Wednesday on the back of sharp losses in the oil markets overnight.

Back home, Indian equity benchmarks dived deeper into negative territory and ended with heavy losses of over three percent on Tuesday, tracking weakness in global peers, after US crude prices nosedived below the $0 a barrel mark for the first time ever highlighting an unprecedented global oil gut. Sensex and Nifty slipped below their crucial 30,650 and 9,000 levels, respectively. Key indices made a gap-down opening as traders were cautious with report showing that investments through participatory notes (P-notes) in the domestic capital market plunged to an over 15-year low of Rs 48,006 crore at the end of March amid high volatility in broader markets on concerns over coronavirus-triggered recession. The street took a note of Eminent economist Arvind Panagariya’s statement that India must now think long-term to create better paying formal sector jobs by seizing the opportunity presented by multinationals possibly moving out of China to diversify their operations in the wake of the COVID-19 pandemic. Trading sentiments remained subdued in the late trade as Fitch Solutions stating that the Reserve Bank of India (RBI) is expected to cut interest rates by 75 basis points by March 2021 as monetary easing measures till now are insufficient to lift the economy reeling under the stress of the Covid-19 pandemic.  Investors’ sentiments were also pessimistic with Moody's report that the loan moratorium extended by banking regulators in countries like India and China to deal with the liquidity crunch amid COVID-19 crisis will provide temporary relief to borrowers, but will constrain banks from taking proactive recovery actions and could lead to an even greater build-up of credit losses once the moratoriums are lifted. Finally, the BSE Sensex lost 1011.29 points or 3.20% to 30,636.71, while the CNX Nifty was down by 280.40 points or 3.03% to 8,981.45.