NEW DELHI: Dalal Street looks headed for another sharp drop in stock prices on Monday, as investors fear further lockdowns in India and abroad in the wake of virus outbreak, would halt economic activity and have a major bearing on corporate financials.Here’s breaking down the pre-market actions.
TRADE SETUP
Singapore trading sets stage for gap-down start
Nifty futures on the Singapore Exchange traded 1,077 points, or 12.3 per cent, lower at 7,677, indicating a major gap-down start for Dalal Street.
Tech view: Nifty support at 7,900
Nifty has an important support area in the 8,400-7,900 zone as 8,433 is the 100-month simple moving average, said Santosh Meena, Senior Analyst at TradingBells. In 2008, the index made a bottom at this average, while the 7,900 level was a low seen at the time of demonetisation.
Asian shares, US futures drop up to 5%
Asian shares slid on Monday as more countries shut down in the fight against the coronavirus. E-Mini futures for the S&P500 dived 5 per cent at the open to be limit down. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 2 per cent, with South Korea badly hit. The commodity-heavy Australian market shed 5 per cent. Japan’s Nikkei added 0.8 per cent.
US stocks plunged 3-5% on Friday
The Dow Jones Industrial Average fell 913.21 points, or 4.55 per cent, to 19,173.98, the S&P500 index lost 104.47 points, or 4.34 per cent, to 2,304.92 and the Nasdaq Composite dropped 271.06 points, or 3.79 per cent, to 6,879.52. Friday’s drop left the Dow down 3 per cent from when President Trump took office in January 2017.
Brent prices decline 5% in early trade
Oil prices fell at the open in Asia on Monday after a trillion-dollar Senate proposal to help the coronavirus-hit American economy was defeated and death tolls soared across Europe and the US. West Texas Intermediate initially tumbled more than three per cent but then pulled back some ground to trade 1.5 per cent lower, at $22 a barrel, AFP reported. Brent crude, the international benchmark, fell 4.9 percent to $25 a barrel.
No shorter working hours: Sebi
Indian stock markets will operate as usual on Monday, a Securities and Exchange Board of India (Sebi) spokesperson clarified on Sunday. Separately, NSE and BSE also said all segments at the exchanges will operate as usual on Monday.
Sebi curbs on index selling, margins in cash segment
In wake of the prolonged rout in domestic stocks, market regulator Sebi has stepped in to ease volatility by clamping curbs on short positions in the F&O segment, increasing margins in non-F&O stocks in the cash market and revising the marketwide position limits.
FPIs sell Rs 3,346 crore worth of stocks
Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 3,346 crore on Friday, data available with NSE suggested. DIIs were net buyers to the tune of Rs 2,431 crore, data suggests.
MONEY MARKETS
Rupee: The rupee gave up its day’s gains to settle 8 paise lower at a fresh life-time low of 75.20 against the US dollar on Friday as forex market continued to grapple with economic uncertainties due to fast-spreading coronavirus pandemic.
10-year bonds: India 10-year bond yield fell 2.36 per cent to 6.26 after trading in 6.17-6.39 range.
Call rates: The overnight call money rate weighted average stood at 4.96 per cent, according to RBI data. It moved in a range of 3.40-5.20 per cent.
HAPPENING TODAY
- Indian FM reply on Finance Bill
- Chicago Fed National Activity Index Feb
- Russia GDP YoY Feb
- Euro Area Consumer Confidence Flash March
MACROS
FM may unveil steps to tackle Covid-19 today
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. She could also propose a threshold of Rs 15 lakh for the taxation of the income of non-residents who don’t pay tax in other jurisdictions, taking the sting out of the contentious budget proposal. The government is also seeking to raise special additional excise duty on petrol to Rs 18 per litre and on diesel to Rs 12 per litre, raising revenue for relief measures. Special additional excise duty had been raised by Rs 2 each on March 14.
India heading for major lockdown
Large swathes of the country will be on lockdown from Monday amid alarm over Covid-19 cases rising to 396 on Sunday from 315 on Saturday — the biggest jump in a day — and the death toll going to seven from four. Delhi, Maharashtra, Andhra Pradesh, Telangana, Punjab, Rajasthan and Uttarakhand will be shut until March 31 — and more states could follow. West Bengal’s lockdown will last until March 27 while UP announced a closure in 16 districts until March 25. Chhattisgarh and Bihar announced a shutdown in all urban areas until March 31. Passenger trains, interstate buses and suburban and metro trains have been halted until March 31. State borders have been sealed. The number of districts under lockdown, initially fixed at 75.
US economy may plunge 30% in Q2: MS
Morgan Stanley economists said the coronavirus will inflict a deeper recession on the US than previously expected, including a record 30.1% drop in gross domestic product in the second quarter. Less than a week since forecasting a 4% contraction in April through June, the economists led by Ellen Zentner said they now anticipated a steeper drop and that unemployment will average 12.8% and consumption will fall 31% in the quarter.
Manufacturing grinds to a halt in key sectors
Key segments of Indian manufacturing have started shutting down in response to the lockdown orders issued by central and state governments and the suspension of public transport services in many places in the country. Automakers, smartphone makers, consumer electronic firms, appliance majors and many others have ordered shutdowns till month-end. While some will take stock by March 25, others will remain shut till March 31.
FMCG firms moving fast to restock stores
India’s biggest consumer goods companies are ramping up production to meet the steep rise in demand with people rushing to stock up on essentials and groceries in bulk amid fears of a lockdown due to the coronavirus outbreak as several states imposed stringent curbs on movement. This marks a reversal of last year’s fortunes when companies cut production because of weak consumption across segments. Companies and experts said the surge may be temporary and not make up for slowing sales in the past two months in this quarter.
Oil falls more than $1 as coronavirus spreads
Oil prices fell more than $1 a barrel at the start of the trading session on Sunday, as more governments ordered lockdowns to curb the spread of the global coronavirus pandemic that has slashed the demand outlook for crude. Brent crude LCOc1 futures fell $1.90 to $25.01 a barrel in chaotic trade, . West Texas Intermediate (WTI) crude CLc1 futures shed $1.58 to $21.05 a barrel. Oil prices have fallen for four straight weeks and have lost about 60% since the start of the year.
FMs of G20 nations to hold talks as virus fallout
Finance ministers from the Group of 20 major economies are to meet by teleconference on Monday, according to the published agenda of French finance chief Bruno Le Maire. The talks, scheduled for 1100 GMT, come as the G20 faces pressure to bridge internal divisions and take coordinated action against the spread of coronavirus.
India Inc seeks fiscal stimulus, debt moratorium
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. India has already been facing growth deceleration, with GDP growth falling to 4.7 per cent in the third quarter of FY2020. The impact of COVID-19 is likely to drag it down further in the fourth quarter.
