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Benchmarks to make gap-down opening of new week
Mar-30-2020

Indian markets gave up early gains and ended mixed on Friday as coronavirus worries persisted. Today, the markets are likely to get gap-down opening tracking sell-off in the global markets amid Covid-19 pandemic. Globally, the total number of reported cases has now risen to over 7.2 lakh with nearly 34,000 deaths. In India, the total number of confirmed coronavirus cases has crossed 1,000 mark, with 27 people dead so far. Traders will be concerned with the International Monetary Fund’s (IMF) statement that the world is in the face of a devastating impact due to the coronavirus pandemic and has clearly entered a recession, but projected a recovery next year. There will be some cautiousness with domestic rating agency Icra’s statement that India's gross domestic product (GDP) is likely to contract by 4.5 per cent in the April-June 2020 quarter and will rise by only 2 per cent in 2020-21 on the coronavirus impact, despite the Reserve Bank of India's (RBI) massive actions to spur the economy. Also, the country’s foreign exchange reserves fell by a whopping $11.98 billion to $469.909 billion in the week to March 20 as the Reserve Bank continued to supply dollars into the market to stem fall in the rupee. Investors will be eyeing on the Finance Ministry and RBI meeting to be held on March 31 to decide on government's borrowing plan for the first half of 2020-21 amid the lockdown to contain the spread of coronavirus. Though, traders may take note of the Economist Intelligence Unit (EIU) in its post-Covid-19-outbreak stating that even as the Indian economy is likely to be battered by the Coronavirus pandemic this year, it is still likely to be better off than all other G20 countries. Meanwhile, a report stated that India is boosting its overall health infrastructure by initiating measures like designating dedicated hospitals for affected patients in states, ramping up procurement of ventilators and mobilising resources of Railways and armed forces to deal with any eventuality. There will be some buzz in the telecom stocks with industry body COAI’s statement that debt-ridden telecom operators are likely to opt for three-month moratorium to avoid cash crunch during the lockdown. Auto stocks will be in focus as the Supreme Court (SC) allowed the sale of only 10 of the 700,000 unsold BS4 vehicles (7.27 lakh vehicles) beyond the March 31 deadline. There will be some reaction in power stocks with report that peak power demand in the country dipped over 26% to 120.31 gigawatts (GW) on March 26 as compared to 163.72 GW on March 20, showing impact of a nationwide lockdown amid the coronavirus outbreak.

The US markets ended sharply lower on Friday as the national shutdown in response to the coronavirus delivered crushing losses to investors. All Asian markets are trading in red on Monday as fears mounted that the global shutdown for the novel fast-spreading coronavirus (COVID-19) could last for months, doing untold harm to economies.

Back home, 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. 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.

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