Market Ahead, March 23: Top factors that could guide markets this week

Investors are staring at another tough day in the markets today as more countries all but shut down in the fight against coronavirus. The SGX Nifty plunged over 1,000 points early morning on Monday after India entered a virtual shutdown phase to contain the coronavirus spread, indicating that the Nifty may hit the 10 per cent lower circuit at or soon after the open today. If it does, a 45-minute trading halt will follow before trading resumes.

India yesterday reported three more coronavirus deaths, taking the toll to seven with the number of Covid-19 cases rising to 396. As such, the government announced lockdown in 75 districts that have reported confirmed coronavirus cases or deaths. India will also suspend trains, transport between states and Metro in its biggest cities during this period. Globally, coronavirus has taken more than 14,600 lives globally with over 3.3 lakh infected as nations across the globe struggle to halt the fast-spreading virus. Its possible economic ramifications already has stock markets across the world on the ropes which have corrected massively in the last few weeks.

The market bloodbath in the Indian stock market continued last week so much so that despite Friday's sharp recovery, the Sensex ended the volatile week with a 12 per cent deficit. To curb such volatility in stocks, the Securities and Exchange Board of India has announced certain measures. like curbs on short selling, a steep increase in margins, a 10-fold increase in penalties, and reducing the outstanding positions available for derivatives trading. However, in a scenario when the investor sentiment is so weak across the globe, it is to be seen how effective the steps turn out to be. Moreover, the March derivative contracts will expire coming Thursday and positions will be rolled over to next month, which may add to the volatility.

Finance Minister Nirmala Sitharaman, on Friday, said the ministry has been compiling demands from coronavirus-hit sectors. Also, the Reserve Bank of India has announced that it will conduct open market operations for Rs 30,000 crore in two tranches. However, any real relief for investors will come only after negative news stops trickling in on the coronavirus front.

As for now, signs from the global markets aren't at all encouraging. The Dow Jones futures on Monday dived 5 per cent right at the start of Asian trading to be limit down. Nikkei futures sank 5.8 per cent. In commodities, oil slid further as mass bans on travel worldwide crushed demand for fuel. Brent crude futures slid another $1.90 to $25.01 a barrel.

All in all, tighten your seatbelts as the ride is going to be a little rougher today.

Read by: Kanishka Gupta