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Indian benchmarks end volatile session on flat note
Mar-27-2020

In an extremely volatile session, Indian equity benchmarks traded between green and red terrain throughout the day and ended flat on Friday, despite strong trend seen in other Asian markets.  Key indices staged a gap up opening and traded jubilantly, as FM Nirmala Sitharaman announced a coronavirus relief package for the economically weaker sections of the society.  However, markets came off the day's high and turned volatile in early afternoon session after the RBI announced a cut in its repo rate by 75 basis points (bps) to 4.4 per cent while reverse repo rate was reduced by 90 bps to 4 per cent. Apart from this, the central bank cut the cash reserve ratio (CRR) for the banks by 100 bps to 3 per cent with effect from March 28 for the next year, which it said will release Rs 1.37 lakh crore in liquidity. Along with these measures, RBI Governor Shaktikanta Das said all the commercial banks were permitted to allow a three-month moratorium on payment of instalments of all term loans as on March 1, 2020.

Sentiments remain muted in late trade, as RBI Governor admitted that growth projection of 4.7% for the March quarter and 5% for the whole fiscal was at risk. Some pessimism also came as Rating agency Crisil cut its growth estimate for India to 3.5 percent for next financial year (FY21) amid severe dent in the economic activity due to the coronavirus pandemic. The agency said the estimate of 3.5 percent growth in 2020-21 assumes a normal monsoon and also a subsidising of the pandemic's economic impact in the June quarter. The slump in growth will be concentrated in the first half of the next fiscal, while the second half should see a mild recovery.

On the global front, Asian markets ended mostly higher on Friday, amid traders buoyed by government and central bank pledges to prop up the global economy as the coronavirus sends countries into lockdown. However, European markets were trading in red, halting their biggest ever three-day rally in a sign investors were focusing once more on the spread of the coronavirus pandemic despite hopes for further stimulus measures to combat its economic impact. Back home, infrastructure stocks were in focus as ratings agency ICRA stated that the government's move to stop toll collection amid the 21-days’ nationwide lockdown is set to push toll collection into the negative territory for FY 2020, while collection in April, and subsequently FY 2021, is also likely to be adversely impacted. Telecom stocks too were in watch as the Department of Telecommunications (DoT) asked operators to provide the Wireless Planning and Coordination Wing (WPC) with details of the amount of spectrum in each circle they would require temporarily.

Finally, the BSE Sensex lost 131.18 points or 0.44% to 29,815.59, while the CNX Nifty was up by 18.80 points or 0.22% to 8,660.25. 

The BSE Sensex touched high and low of 31,126.03 and 29,346.99, respectively and there were 13 stocks advancing against 17 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.29%, while Small cap index was up by 0.28%.

The gaining sectoral indices on the BSE were Bankex up by 0.96%, Metal up by 0.47%, Consumer Durables up by 0.28%, Power up by 0.25% while, Telecom down by 5.18%, Auto down by 2.35%, Oil & Gas down by 1.50%, Basic Materials down by 0.89%, Consumer Discretionary Goods & Services down by 0.81% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 4.98%, ITC up by 3.63%, NTPC up by 3.17%, Mahindra & Mahindra up by 2.66% and ICICI Bank up by 2.44%. On the flip side, Bajaj Finance down by 8.87%, Hero MotoCorp down by 8.04%, Bharti Airtel down by 6.09%, Indusind Bank down by 5.94% and Maruti Suzuki down by 4.81% were the top losers.

Meanwhile, ratings agency Fitch has said that the coronavirus-related worries are likely to aggravate difficulties for Indian banks. It also revised down the operating environment score for the critical sector to BB from BB+ earlier, given the uncertainty surrounding the severity and duration of the pandemic, and the associated effects on India's banks of restrictions on economic activity.

According to the ratings agency, the lockdown will impact industrial production and domestic demand and this will exacerbate the economic slowdown of the past few quarters that was partly caused by weaker credit availability from non-bank lenders from September 2018. However, it said that the closed nature will help restrict the impact on economic growth in India as compared with Asian peers.

Fitch further said Indian banking system is under-capitalised and continues to saddled with bad loans, despite some successes. It also believed that the recent developments will add to these issues and slow the resolution process and it will further test the underwriting standards of those banks that expanded the fastest in recent years, including the private-sector banks, as the sharp disruption in economic activity will lead to worsening asset quality.

The CNX Nifty traded in a range of 9,038.90 and 8,522.90 and there were 23 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Coal India up by 6.41%, Axis Bank up by 6.18%, Cipla up by 6.05%, NTPC up by 4.71% and ITC up by 4.38%. On the flip side, Bajaj Finance down by 7.94%, Hero MotoCorp down by 7.88%, Indusind Bank down by 5.68%, GAIL India down by 4.58% and Maruti Suzuki India down by 4.57%  were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 226.45 points or 3.89% to 5,589.28, France’s CAC fell 138.87 points or 3.06% to 4,404.71 and Germany’s DAX was down by 218.17 points or 2.18% to 9,782.79.

Asian markets ended mostly higher on Friday, supported by investors' optimism over US stimulus and a pledge by G20 countries to inject $5 trillion into the global economy to limit job and income losses from the corona virus pandemic. Investors shrugged off a report showing that US jobless claims surged by the most on record in the last week. Japanese shares ended higher amid reports showed that Japanese Prime Minister Shinzo Abe is expected to order his cabinet to compile an economic package with spending worth $135 billion or more. Chinese shares closed higher as the latest dismal economic readings reinforced hopes that Beijing would roll out more monetary and fiscal measures to bolster its economy. China's industrial profits declined sharply by 38.3 percent during January to February period from the same period last year as corona virus epidemic weighed heavily on economic activity.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,772.20
7.29
0.26

Hang Seng

23,484.28
131.94
0.56

Jakarta Composite

4,545.57
206.67
4.76

KLSE Composite

1,343.09

15.00

1.13

Nikkei 225

19,389.43
724.83
3.88

Straits Times

2,528.76
41.20
1.66

KOSPI Composite

1,717.73
31.49
1.87

Taiwan Weighted

9,698.92
-37.44
-0.38



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