INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Indian stock market plunged into bear territory last week after the coronavirus outbreak was termed a pandemic and the US
suspended travel from Europe, threatening more disruptions to the business and the world economy.
The news around the pathogen is likely to
hog the limelight this week, with infected and death counts increasing across the world
Movement in crude, FII selling and SBI Card listing are among other factors that may impact the movement of the market going ahead.
“This
appears to be a great opportunity for investors to invest in quality compounders for the next decade and create wealth
Sectors such as FMCG sector, consumer durables, IT, private sector banks can be looked at for accumulation while cyclicals such as metals,
PSUs should be avoided,” said Jimeet Modi, Founder - CEO, SAMCO Securities - StockNote.
Going by the buzz on Dalal Street, these are the
factors that may guide the market in the coming week:Coronavirus: Death count mountsIndia reported its second death as the number of
infections climbed over 93 till Sunday morning
Indian Council of Medical Research warned community transmission of the virus in India is inevitable and then the new cases may increase
rapidly.
A sharp rise in cases in the country may give the bears more ammunition to hammer equity markets.
Globally, the number of cases is
moving rapidly towards the 1.5 lakh mark with Europe being the new epicentre, as per WHO
Italy has reported 1,266 deaths with total cases around 18,000
The US, which has over 2,000 active cases, declared a national emergency to battle the rapidly spreading virus.
Dip in oil prices to cut
India’s billBrent crude dropped 25 per cent last week, the biggest weekly fall since the 2008 global financial crisis
The US West Texas Intermediate (WTI) crude futures fell about 23 per cent on the week, also the biggest percentage decline since 2008.
The
huge dip was due to a price war started by Saudi Arabia’s decision to reduce the oil price for preferred customers and Opec members
planning to increase production.
“The demand outlook for oil was anyways weak, following the impact of Covid-19, and with the price crash,
it is expected to put extra pressure on the global GDP growth
However this will benefit India, being a net importer of oil, and will give more fiscal manoeuvring room for the government to stabilise the
economy,” said Vinod Nair, Head of Research at Geojit Financial Services.
SBI Card listingSBI Cards and Payments (SBI Card) is scheduled
to debut on the bourses on Monday, March 16
Going by the trends in unofficial markets for unlisted shares, the issue may see a flat to discount listing
If that is the case then HNI investors who borrowed money to invest with hopes of listing gains may take a hit.
However, some Dalal Street
analysts said a huge amount refunded by the company to those who were not allocated the shares may be diverted to the stock, providing some
support.
AGR issueThere could be more clarity on the AGR issue for telcos this week as the Supreme Court’s deadline to pay the amount ends
The apex court is scheduled to hear the AGR matter on the same date.
Bharti Airtel has asserted that it has paid the amount in full as per
Tatas have also said the same
Telecom firms have calculated the amount dues much lower than the estimates by the Department of Telecom.
Meanwhile, the department will
carry out reassessments on the basis of documents submitted by telcos on self-assessment of AGR dues as per licence agreement, and issue
revised demand notices, Minister of State for Communications Sanjay Dhotre said in a written reply to Rajya Sabha.
YES Bank sagaTwists and
turns in the unfolding YES Bank saga sees no end
The government on Friday announced the restructuring scheme for the private lender, but the clause that investors who hold 100 shares will
have a lock-in for 75 per cent of their holding for three years
The announcement has irked many retail investors and shares of the lender may see some volatility in the coming weeks.
YES Bank late on
Friday reported a loss of Rs 18,564 crore for the December quarter against a profit of Rs 1,000 crore a year ago.
FII dumping sharesForeign
institutional investors hammered Indian shares last week
They withdrew a net Rs 19,613 crore from the markets in just four sessions as per NSE data compiled by Accord Fintech
In March till now, foreign money managers have pulled out Rs 30,334 crore from Indian equities as ETF redemptions have grown.
If they
continue the trend, the sentiment on Dalal Street will dampen further.
WPI data dueTraders will keep an eye on wholesale price inflation
(WPI) data for the month of February, scheduled to be released on March 16
WPI in India rose 3.1 percent year-on-year in January 2020, following 2.59 percent gain in the previous month
It was the highest wholesale inflation rate since April last year, driven by a rebound in cost of both manufacturing and fuel.
US Fed
meetAll eyes will be on the Federal Open Market Committee and its decision on Wednesday, with the main questions being how deeply it will
cut interest rates, what other actions might be announced and whether officials might even act before their regularly scheduled gathering,
Forex reserve dataMarketmen will also be eyeing foreign exchange reserve data to be announced on March 20
Forex reserve in India increased to $481 billion in February 29 from $476 billion in the previous week.
Rupee hovers at record lowThe rupee
hit its lowest ever of 74.50 on Friday before rebounding as RBI assured to maintain sufficient liquidity in the currency market
The USD/INR pair trades at 73.91.
Recently, RBI announced a $2-billion swap for six months to address the dollar shortage in the market due
to massive selling by FIIs
It means the central bank decided to sell dollars in the market now and buy them back six months down the line (or decide to roll
over).
Technical outlookNifty on Friday formed a Long Bearish Candle on the daily chart
Analysts said the index could now head for levels up to 8,900, if the 9,550-9,500 range is broken next session.
“The index tested 100
month EMA on the monthly chart which was never seen after 2008 bottom
This was an extreme overreaction clouded by coronavirus and global equity sell off
Increase in volume confirms that panic selling is almost over,” said Jimeet Modi
This forms a short-term bottom at least for some time and traders can exploit this opportunity for a sizable up-move by taking buying on
