Domestic shares slumped on Monday as the spread of the coronavirus outside China spoiled investor sentiment with infections and deaths rising in South Korea, Italy and the Middle East. The Nifty ended below its 100 days simple moving average placed at 11,955.66.
The S&P BSE Sensex, lost 806.89 points or 1.96% at 40,363.23. The Nifty 50 index fell 242.25 points or 2.01% at 11,838.60.
Selling was wide spread. The S&P BSE Mid-Cap index shed 1.60% while the S&P BSE Small-Cap index fell 1.58%.
The market breadth was weak. On the BSE, 748 shares rose and 1769 shares fell. A total of 181 shares were unchanged.
Global sentiment took a beating following reports that South Korea raised its coronavirus alert to the "highest level" following a rapid spike in cases over the weekend. Italy's confirmed cases surged from three on Friday morning to more than 150 by Sunday.
In a sign of panic, US index futures pointed to sharp declines on Wall Street at the open on Monday. Dow Jones futures pointed to an implied opening plunge of about 800 points today.
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Namaste Trump:
US President Donald Trump and his wife Melania are in India on a 36-hour trip that will see them visiting Ahmedabad, Agra and New Delhi. It is Trump's first presidential visit to India and the fifth official visit by a serving US president to the country since 2000.
Last week, Trump said that both the countries were working on a major trade deal. However, US officials clarified on Friday that Trump's visit will not result in even a limited trade deal as they have concerns over India's trade barriers.
Economy:
National Council of Applied Economic Research (NCAER) on Friday (21 February) pegged the economic growth for the current fiscal at 4.9%, a tad down from 5% estimated by the National Statistical Office (NSO). However, for 2020-21, the NCAER expects the Indian economy to improve its growth rate to 5.6%. Indian economy grew by 6.1% in 2018-19.
Numbers to Watch:
MCX Gold futures for 3 April 2020 settlement rose 2.54% to Rs 43,750, as a spike in coronavirus cases prompted a flight to safe havens.
The yield on 10-year benchmark federal paper fell to 6.357% at 16:37 IST compared with 6.422% at close in the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 71.94, compared with its close of 71.64 during the previous trading session.
In the commodities market, Brent crude for April 2020 settlement fell $2.25 to $56.25 a barrel. The contract fell 81 cents or 1.37% to settle at $58.50 a barrel in the previous trading session.
Foreign Markets:
Shares in Europe and Asia tumbled on Monday as investors focus on the continuing spread of the coronavirus and watch as Italy grapples with the largest coronavirus outbreak outside of Asia.
Coronavirus concerns continued to dominate headlines Europe. There are widespread apprehensions over the spread of the virus in northern Italy. Iran and South Korea have also seen a sharp rise in cases of the virus.
Meanwhile in China, the center of the epidemic, the National Health Commission reported an additional 150 deaths and 409 new confirmed cases as of 23 February.
In US, stocks slumped on Friday as the spread of the COVID-19 epidemic from China to neighboring countries amplified worries about the impact on supply chains and global economic growth.
Stocks also came under pressure after IHS Markit reportedly said business in the US contracted in February for the first time in four years owing to disruptions caused by the coronavirus and growing angst over the outcome of the 2020 presidential election.
Buzzing Indian Index:
The Nifty Metal index tumbled 5.36% to 2,472.35, declining the most among the sectoral indices on the NSE.
Jindal Steel & Power (down 9.44%), JSW Steel (down 8.13%), SAIL (down 6.88%), Tata Steel (down 6.39%), Vedanta (down 6.36%), Hindalco Industries (down 5.5%), NALCO (down 4.89%), Hindustan Copper (down 4.79%), NMDC (down 3.24%) and Hindustan Zinc (down 1.51%) declined.
Prices of industrial metals have come under pressure as mounting fears that the new flu-like virus will grow into a pandemic have heightened worries of a slowdown in global economic growth. China is reportedly the largest producer and consumer of industrial metals. Given such a dominant market share any slowdown in the Chinese economy has a major impact on metal prices and global markets.
Stocks in Spotlight:
Aurobindo Pharma crashed 15.96%. The drug maker said that the USFDA inspection at its Unit IV is still open and under review. The drug regulator has also rescinded the Voluntary Action Initiated (VAl) status given to the facility.
Dr Reddy's Laboratory fell 2.77%. The drug maker received the establishment inspection report (EIR) from US Food and Drug Administration (USFDA) for the inspection conducted at the company's formulations manufacturing plant in Duvvada, Visakhapatnam. The receipt of the EIR indicates the closure of the USFDA's audit at the said facility, the company said after trading hours on Thursday, 20 February 2020.
Bharti Infratel tumbled 4.56%. The company said it has received Foreign Direct Investment (FDI) approval for its proposed merger with Indus Towers. The company in a regulatory filing said, "Please be informed that FDI approval for merger of Indus Towers with Bharti Infratel has been received late evening yesterday (21 Feb). Bharti Infratel's board will meet on Monday (24 February) to take stock and decide the future course of action.
Max Financial Services surged 4.81% while Axis Bank lost 2.44%. Axis Bank, Max Financial Services and its subsidiary Max Life Insurance Company on Thursday (20 February) signed a confidentiality and exclusivity arrangement to explore the possibility of the private lender entering into a long-term strategic partnership with Max Life. Max Life is currently the largest non-bank owned private life insurer in India. Max Financial Services presently holds a 72.5% stake in Max Life while Mitsui Sumitomo Insurance and Axis Bank hold 25.5% and 2% stake, respectively. Axis Bank and Max Life have had a successful bancassurace (banca) arrangement for nearly a decade. The new premium generated through this banca arrangement has aggregated to over Rs 12,000 crore over this period, while maintaining high persistency. Both companies have invested extensively in product and need-based sales training, thereby leading to consistent increase in productivity.
Mahindra & Mahindra lost 1.95%. The automaker said that its step-down wholly-owned arm Mahindra Renewables will sell its entire stake in three subsidiaries to CLP India, a part of Hong Kong-based CLP Group, for nearly Rs 340 crore. Mahindra Renewables (MRPL) has agreed to sell its entire stake aggregating 100% stake in Cleansolar Renewable Energy (CREPL), Divine Solren (DSPL) and Neo Solren (NSPL), wholly-owned subsidiaries of MRPL, to CLP India. In the fiscal ended 31 March 2019, CREPL had a turnover of Rs 39.15 crore, while DSPL's and NSPL's turnover stood at Rs 54.18 crore and Rs 42.68 crore, respectively. The transaction is expected to be completed by 31 May 2020.
PNB Housing Finance fell 2.66% after it informed that CRISIL downgraded its rating on the long-term debt instruments, bank facilities and fixed deposit programme of the company to 'CRISIL AA/FAA+' from 'CRISIL AA+/FAAA'. CRISIL has also revised the outlook on the long-term ratings to 'Stable' from 'Negative'. The rating on the commercial paper (CP) issue and the short-term non-convertible debentures has been reaffirmed at 'CRISIL A1+'.
KEC International rose 1.17% after the company announced the acquisition of a power transmission tower manufacturing facility in Dubai. The company said that the acquisition is done through it is wholly owned subsidiary, KEC Towers LLC. The manufacturing facility, which was acquired at an auction sale conducted by Emirates Auction Authority, has an installed capacity of 50000 MT per annum.
GMR Infrastructure (GIL) surged 7.84% after the company announced a strategic partnership with Groupe ADP for its airports business. GMR Infrastructure said that it has signed a share purchase agreement pursuant to which Groupe ADP will hold 49% stake in GMR Airports (GAL) for an equity consideration of Rs 10,780 crore, valuing GAL at the base post money valuation of Rs 22,000 crore. This equity consideration comprises of Rs 9,780 crore towards secondary sale of shares by GMR group and Rs 1,000 crore worth of equity infusion in GAL.
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