MARKET WRAP: Sell-off resumes; Nifty ends at 3-yr low; Sensex at 30-mth low

Topics Markets | MARKET WRAP

Sectorally, all the sectoral indices ended with deep cuts. Nifty Bank index tumbled 2,087.50 points or over 8 per cent to 23,079
After a one-day halt, stock market resumed its downward trajectory on Monday following global peers after the US Federal Reserve cut interest rates to near zero on Sunday in another emergency move to help shore up the US economy amid the rapidly spreading global coronavirus pandemic. 

Back home, the Reserve Bank of India (RBI), too, is expected to cut rates to fight coronavirus. The central bank is scheduled to hold a press conference at 4 pm today. 

The S&P BSE Sensex today tumbled 2,713 points or nearly 8 per cent to end the session at 31,390 levels. All the 30 constituents of the index ended in the red. IndusInd Bank bled the most - down 17.5 per cent to Rs 663, followed by Tata Steel (down 11 per cent), Axis Bank (down over 10 per cent), and ICICI Bank (down 10 per cent). During the session, the BSE lost Rs 7.5 trillion in market capitalisation. 

NSE's frontline index Nifty tanked 758 points or 7.6 per cent to close at 9,197. YES Bank was the only Nifty stock that ended in the green. The stock advanced 45 per cent to end at Rs 37.05. 

 
All the sectoral indices ended with deep cuts. Nifty Bank index tumbled 2,087.50 points or over 8 per cent to 23,079 levels while Nifty Metal cracked 9 per cent to 1,734 levels. Volatility index India VIX rallied 16 per cent to 59.74 levels. 

Market breadth was in favour of declines as out of 1,836 companies traded on the BSE, 1,410 declined and 330 advanced while 96 remained unchanged. 

In the broader market, the S&P BSE MidCap declined 6 per cent to 11,889 levels while the S&P BSE SmallCap index lost 666 points or 5.66 per cent to 11,095.

New listing

Shares of SBI Cards & Payment Services (SBI Cards) listed at Rs 661, 12.45 per cent below its issue price of Rs 755 on the National Stock Exchange (NSE). On the BSE, it opened at Rs 658, 13 per cent lower against issue price.

Global Markets

Stock markets were routed and the dollar stumbled on Monday after the Federal Reserve slashed interest rates in an emergency move and its major peers offered cheap US dollars to ease a ruinous logjam in global lending markets. European shares, too, plunged as the coronavirus pandemic raged through much of Europe, with dramatic monetary easing by global central banks failing to reassure investors about its growing economic damage.

In commodity market, US crude fell below $30 as emergency rate cuts by the US Federal Reserve and its global counterparts failed to tame markets and China’s factory output plunged at the sharpest pace in 30 years amid the spread of coronavirus. Gold prices, too, jumped in trade before paring gains as some investors sold the metal
for cash amid a sell-off in equities.

(With inputs from Reuters)


LIVE UPDATES

MARKET COMMENT | Vinod Nair, Head of Research at Geojit Financial Services

Easing monetary policy action from central banks across the globe highlights that the impact of coronavirus is worse than thought. Economic, trade and travel shutdown are impacting equities across the globe. RBI will join its global peers in announcing measures like rate cut and additional measures to improve liquidity and confidence.

SECTOR WATCH | Nifty Metal index cracks 9%


MARKET AT CLOSE | All 30 constituents of Sensex end in the red


CLOSING BELL

The S&P BSE Sensex nosedived 2713 points or nearly 8 per cent to 31,390 levels while NSE's Nifty ended at 9,197, down 758 points or 7.6 per cent.

MARKET CHECK


MARKET ALERT :: Nifty slips below 9,200


MARKET COMMENT:: Karan Mehrishi, Lead Economist at Acuité Ratings & Research, on possible RBI rate cut

Acuité believes that there is a possibility of a surprise rate cut before April to the tune of 50 bps, following the examples of the USD FED and BOE rate cuts. A rate cut, if any, at this point may not be driven by inflation concerns. Even liquidity in the system is substantial. It will be more of a market calming move. The coronavirus threat is assumed to be a trigger point behind the move. Food inflation is also expected to be moderate with the Rabi harvest and core inflation likely to remain low. The yield differentials with foreign debt is also comfortable at this point so a rate cut may not put incremental risk to inflows. We even expect the reduction in CRR to increase liquidity along with tweaking the non SLR HQLA requirements.

Global Markets check

European shares tumbled more than 8 per cent on Monday as the coronavirus pandemic raged through much of Europe, with dramatic monetary easing by global central banks failing to reassure investors about its growing economic damage.

The pan-European STOXX 600 fell 8.2 per cent to its lowest since November 2012, with bourses in France and Spain leading losses as the two countries joined Italy in enforcing a national lockdown.

In Asia, MSCI’s index of Asia-Pacific shares outside Japan tumbled 4 per cent to lows not seen since early 2017, while the Nikkei fell 2 per cent as the Bank of Japan’s easing steps failed to stabilise market confidence.

NEWS ALERT | Prepare business for a U or even V shaped recovery: Anand Mahindra on Covid-led disruption

BROKERAGE RADAR | Axis Securities on Britannia Ind


Expert Tweets :: Anand Mahindra on how isolation during Covid-19 could be a blessing

Goldman Sachs downgrades US growth forecast for Q1, Q2 due to coronavirus

"We expect US economic activity to contract sharply in the remainder of March and throughout April as virus fears lead consumers and businesses to continue to cut back on spending such as travel, entertainment, and restaurant meals," Goldman said in its latest research note. READ MORE

NEWS ALERT | DoT seeks SC nod for 20-yr window to make AGR dues' payment: CNBC TV18

>> Interest on pruncipal, penalty to not to be charged beyind judgement date

>> Dues payable to govt to be protected by levy of 8% interest on staggered payment

COMPANY LATEST(rs) CHG(rs) CHG(%) VOLUME
VODAFONE IDEA 5.57 -0.06 -1.07 83893601
BHARTI AIRTEL 465.05 -29.15 -5.90 338157
TEJAS NETWORKS 40.90 -3.90 -8.71 8018
» More

NEWS ALERT | BHEL wins order for electric buses: BSE filing


NEWS ALERT | YES BANK TO RESUME SERVICES FROM MARCH 18

NEWS ALERT | CAPA fears airlines could turn bankrupt if Covid-19 isn't curtailed

MARKET UPDATE:: Sell-off intensifies, Sensex down nearly 2,600 pts now


Macquarie on SBI Cards and Payment Services

Recommendation: Outperform | Price target: Rs1,025 | 12-month TSR: +35.8%

We believe SBIC’s strong parentage, market leadership, brand and smart strategies will enable it to capture a rising share of India’s fast-growing credit card industry. Regulatory intervention risks and asset quality cycles are inevitable, but not imminent in our view. We are initiating coverage with an Outperform rating and a residual income model-based TP of Rs1,025 (36% upside potential; implies target FY22E P/E, P/BV and PEG ratios of 35x, 8.7x and 1.1x, respectively)

European markets trade lower


NEWS ALERT | Significant space for monetary policy action by RBI: Chief Economic Adviser

-- Monetary toolkit important at this time to deal with COVID-19: CEA

-- Special series bonds plan may benefit from easy global liquidity now: CEA

-- Rupee management policy to remain unchanged despite current weakness; CEA

(via CNBC TV18)

YES Bank AT1 bond write-down reflects distinct treatment for private banks

This would create losses for asset managers and raise capital costs for issuers. A complete write-down would likely raise the risk premium that investors price into Indian hybrids, said S&P Global Ratings credit analyst Deepali Chhabria.
 
The bailout scheme requires YES Bank to write down about Rs 8,700 crore ($1.2 billion) of outstanding AT1s. READ MORE

Sensex near day's low


Contribution to S&P BSE Sensex's fall today


MARKET STRATEGY :: Rusmik Oza, Sr. VP (Head of Fundamental Research-PCG), Kotak Securities

Markets have just fallen vertically in a very short duration of time so when the recovery takes place it will be anywhere between 45 to 60 degree angle. This has happened on most previous occasions. The charts, valuations and volatility Index (Vix) show that too much of negatives that could or are likely to come over a period of time have got discounted as of now (too soon, too fast). This calls for a tactical pull back in equity markets.

We advise to focus on mega caps or large caps at this juncture as the valuation gap between large caps and mid caps has narrowed down. One needs to keep in mind that volatility is going to remain for some time and we are not out of the woods yet as the number of cases of Covid-19 are going to keep escalating across the globe in the coming weeks. However, due to fear factor markets have the tendency to react too much too soon and in this process create panic bottoms which in hindsight after some months and years look like it was a good buying opportunity then

Will the RBI cut rates today? Fiscal boost also needed to battle slowdown

According to JP Morgan, interest rate cuts may not assuage investors who are dealing with twin shocks of a slump in crude oil prices and the outbreak of Covid-19, leading to a sharp repricing in global markets, including in equities, fixed income, commodities and currencies. READ MORE

Coronavirus update:: Four more people test positive in Mumbai and Navi Mumbai

Future Retail hits over 3-year low; stock tanks 46% in four days

Shares of Future Retail were locked in the 10 per cent lower circuit for the third straight day at Rs 153.75, hitting a fresh three-year low on the BSE on Monday with only sellers seen on the counter. The stock of the flagship company of the Future Group was trading at its lowest level since January 10, 2017. In the past four trading days, the stock has tanked 46 per cent, as compared to 9 per cent decline in the S&P BSE Sensex. In the past one month, it has plunged 59 per cent, against 21 per cent fall in the benchmark index.  READ MORE

MARKET UPDATE:: Slight recovery in markets on news of RBI Governor's press conference


India VIX jumps 12%, crosses 50-mark


YES Bank to be dropped from Nifty 50, and other Nifty indices from March 19

Troubled private lender Yes Bank will be dropped from benchmark index Nifty 50, banking index Nifty bank and other Nifty indices from March 19, NSE Indices said on Monday. Earlier, the changes were scheduled to happen on March 27, NSE Indices, a subsidiary of the National Stock Exchange (NSE), said in a statement. However, in light of the recent developments relating to Yes Bank and its reconstruction scheme, NSE Indices' Index Maintenance Sub-Committee (IMSC) has decided to accelerate the removal of Yes Bank from Nifty 50 and Nifty Bank and also remove it from all Nifty equity indices from Thursday, March 19. READ MORE

Motilal Oswal Securities on Marico

·         The stock has corrected nearly 35% since we downgraded MRCO to Neutral at end-2QFY20 results due to the company reporting a sharp deceleration in volume growth, a trend that has well continued in 3QFY20 results as well.
 
·         Trailing FY20 valuations of 32.2x FY20E EPS and FY21/FY22 valuations of 33.4x/27.5x FY22E respectively (much lower than 3-year/5-year/10-year average of 44.8x/ 42.7x/35.2x) offers potential for an upside. We upgrade the stock to ‘Buy’ with TP of INR315. Given the uncertain environment, we are attributing a target multiple of 35x, close to its 10-year average and yet we obtain 21% upside on the stock. If we value the company on its 5-year average, the upside could be ~47%.
 
·         Our forecasts are conservative as they assume Copra price inflation in 2HFY21E, and thus, EBITDA margins are expected to reduce by 220bp in FY21E, leading to a small decline in our EPS forecast. If copra inflation does not come through, upsides risks to our forecasts are significant.

MARKET COMMENT :: Chris Wood of Jefferies

It would be nice to think that Friday’s rally marked the end of the Coronavirus-inspired market sell-off. But that is not GREED & fear’s view. Investors should assume that the US stock market will re-test the late 2018 low of 2,346.6 on the S&P500 with a growing likelihood that it will break below that level.

From a policy standpoint, the most practical thing governments can do is to provide support to small businesses hit by a sudden loss of cash flow. This has now begun to happen. From a more macro standpoint, GREED & fear agrees with Jefferies Chief Market Strategist David Zervos that, aside from renewed quanto easing, the Fed will also enter the realm of credit easing

Chris Wood

NEWS ALERT | Feb WPI inflation at 2.26% vs 3.1% (MoM)

-- Food inflation at 7.31% vs 10.12% (MoM)

NEWS ALERT | Paid full principal amount of Rs 6,854 cr for AGR dues as per self-assessment: Vodafone Idea

-- Paid Rs 2,500 cr on Feb 17, Rs 1,000 cr on Feb 20, and Rs 3,354 cr on March 16
 

Investor wealth worth Rs 6.25 trillion wiped off as markets slide again

Investor wealth worth Rs 6.25 trillion was wiped off in early morning trade on Monday as markets witnessed yet another sell-off, with the BSE benchmark plunging 2,182.41 points as Covid-19 scare continued to hit sentiment. The market capitalisation of BSE-listed companies dropped by Rs 6,25,501.8 crore to Rs 1,23,00,741.02 crore in the opening trade. READ MORE

Covid-19 impact :: Edelweiss on oil & gas

COVID-19 pandemic continues to depress oil demand (see below). We now project a global stock build of about 4mmb/d in 2Q20, with total OECD company stocks moving by end-June (similar level as recent mid-2016 peak), some 150mmb above both the year earlier level and the 5-year average.

In either case, US shale production shall not fall by more than 2mn bpd (9.5mn currently) as shale production cost is poised to fall to $30/bbl as companies with deeper pockets (Exxon Mobil, Chevron, BP, Shell, Conoco Philips) scoop up bankrupt players at lower costs.

Saudis may find it hard to hold on at throwaway prices for too long as half their economy depends on oil with a fiscal budget breakeven at USD80+/bbl; for Russians too, oil makes up 30% of GDP and has a breakeven of $40+ bbl. In contrast, US derives only 5–7% of its GDP from oil

oil

Covid-19 impact :: Emkay Global on gems and jewellery sector

Overall consumption is likely to be impacted due to Covid-19; however, along with this, lower crude oil prices are also likely to impact the consumption cycle of oil-producing nations. This would particularly include gems & jewellery and telecom-related exports

BSE500 stocks that hit 52-week low today

COMPANY PRICE(rs) 52 WK LOW CHG(%)
CENTRUM CAPITAL 12.10 11.30 -3.59
FUTURE RETAIL 153.75 153.75 -9.98
GAYATRI PROJECTS 13.25 13.25 -4.68
GREAVES COTTON 98.60 94.95 -7.46
GRINDWELL NORTON 522.00 475.00 -4.00
» More on 52 Week Low

Covid-19 impact : Edelweiss on home decor segment

Our recent visit to Gujarat (India’s tile manufacturing hub)—coinciding with mounting concerns over COVID-19—helped us get a handle on the situation at ground. A sharp pickup in exports (up 42% YoY YTD) led by opening up of new global markets and higher demand from the GCC countries has eased off domestic supply pressure. That said, domestic demand scenario remains challenging.

The COVID-19 pandemic may affect availability of key inputs (such as abrasives from China). Besides, low oil prices (for the GCC countries) and global slowdown along with logistical challenges at ports are the key risks to Indian tile exports. Nonetheless, the anticipated tailwind from falling gas prices, opening up of multiple markets, and limited capacity addition augur well for leading organised players such as Somany (‘BUY’) and Kajaria (‘HOLD’)

MARKET COMMENT :: Emkay Global

We believe that it is unwise to jump in with broad-based buying after the recent market correction. However, the correction does open up quite a few opportunities in stocks.

Expert tweets :: Samir Arora on report of short selling ban

YES Bank records sharpest ever intra-day rally, surges 58% in a weak market

Shares of YES Bank recorded their sharpest intra-day gain -- 58 per cent -- to Rs 40.40 on the BSE on Monday in an otherwise weak market after the Union Cabinet approved the reconstruction of the crisis-hit private sector lender as per the scheme proposed by Reserve Bank of India (RBI). At 10:34 am, YES Bank was trading at Rs 38.85, up 52 per cent against its previous day’s close of Rs 25.55 on the BSE. READ MORE

Market valuation is attractive; time to take risk for long-term gains

2020 has been a year of unprecedented volatility, starting from the problems in West Asia led by Iran, following up with China Coronavirus, Union Budget, breaking of OPEC-controlled oil prices and the subsequent spread of virus from China to other countries, leading to a World Health Organisation (WHO) declared pandemic. The effect of all these events has led to a massive dent in sentiment and global markets have corrected sharply. READ MORE

NEWS ALERT | Bank of Japan to set aside 2 trillion yen for more buying of commercial paper, corporate bonds: CNBC TV18

-- BoJ to offer 1-yr loans at zero interest against private collateral until September 2020

SECTOR WATCH:: Nifty Bank index falls over 1,400 pts


YES Bank extends gain, up over 50% now


SBI Cards lists 12% below issue price of Rs 755; recovers later

The stock saw a weak debut due to prevailing market condition as the uncertainty regarding the effect of the coronavirus epidemic continued to keep investor sentiment in check. The benchmark indices Nifty50 and S&P BSE Sensex have declined 16.6 per cent since the SBI Card initial public offer (IPO) opened for subscription on March 2, 2020. The indices have tanked nearly 21 per cent, since the credit card arm of the State Bank of India (SBI) filed Draft Red Herring Prospectus (DRHP) for its IPO with Sebi on February 26. READ MORE

All asset classes are vulnerable as things stand, says Marc Faber

MARC FABER, editor and publisher of The Gloom, Boom & Doom Report, tells Puneet Wadhwa that investors are too complacent about the impact the coronavirus pandemic might have on global economic activities. Though the markets may see a strong rebound in between this slide, they will be unable to reclaim the highs.  READ FULL INTERVIEW HERE

Multiplex operator shares tank; PVR slips 19%, Inox Leisure down 15%

Shares of PVR hit 52-week low of Rs 1,046, down 19 per cent, while Inox Leisure slipped 15 per cent to Rs 270 on the BSE in the intra-day trade today. In the past three weeks, PVR has plunged 49 per cent and Inox Leisure has tanked 45 per cent, as compared to a 20.5 per cent decline in the S&P BSE Sensex. READ MORE

NEWS ALERT | SBI Cards lists at Rs 661/share on NSE


Sebi considers short selling ban, trading curbs to reduce market volatility

The Securities and Exchange Board of India (Sebi) is working on a plan to arrest the deep market sell-off and reduce volatility, which has spiked to record levels owing to the damage caused by the coronavirus pandemic. READ MORE

Wonderla Holidays tank 10%

>> Co has decided to temporarily close the Bangalore Park from March 14 to 20, 2020.


IndusInd Bank continues to remain under pressure, tumbles 10%


MARKET ALERT | Sensex cracks nearly 2,100 pts


Escorts tanks 8% despite revision in outlook from stable to positive

>> India Ratings and Research revised outlook to stable from positive, affirms long-term issuer rating at 'IND AA-'


Private banks crack post their nod to invest in YES Bank


Sensex tumbles over 1,900 pts


Magma Fincorp trades weaker as Acuite revises outlook from stable to negative


L&T cracks 4%

>> Board to meet on March 18 to consider and approve first interim dividend on equity shares, if any, for the Financial Year 2019-20


SBI trades over 6% lower ahead of arm SBI Cards listing


YES Bank jumps 29%


Sectoral trends at NSE during Opening trade


Top gainers and losers on S&P BSE Sensex during Opening trade


First Trade | Nifty tests 9,500


First Trade | Sensex begins with a negative tick


Market at Pre-open


Top gainers and losers on S&P BSE Sensex during Pre-open


Rupee opening

Rupee opens weaker at 74.10/$ vs Friday's close of 73.91 against the US dollar

Market at Pre-open


Market at Pre-open


Time to be greedy or fearful? Portfolio strategies for uncertain times

Have markets bottomed out? The honest answer is that we can’t say for sure. That a bottom or a top has been made can only be ascertained only after a considerable period of time has elapsed post the event. Now, if the question is – “can stocks be bought now?” –it then is relatively simpler to answer. While it is customary for experts to advice buying on dips, the answer is actually more nuanced. When market falls, it may mean different things to different people. READ MORE

Market Outlook :: Motilal Oswal Financial Services

Commodity Picks

Wheat
 
Wheat prices in Indore market are trading at Rs 1,837 a quintal. Prices are expected to trade lower towards Rs 1,800 and Rs 1,750 a quintal following expected arrivals and estimates of a record wheat production. READ MORE

Have the Sensex, Nifty bottomed out? Here is what technical charts say

NIFTY50: With the sharp recovery see last Friday, the correction seems to have taken a halt for now. Going forward, any weakness should see buying with support staying around 9,500 – 9,400 levels. We can expect this turnaround to stay as the worst seems to be getting over now. On the higher side, a decisive close above 10,500 levels may further strengthen the upside move. Although major technical indicators are not indicating any aggressive reversal, the index itself is showing strength after a massive correction. READ MORE

NEWS ALERT | China's Jan-Feb industrial output slips 13.5%: Reuters

>> First YoY decline since January 1990

Nifty outlook and top stock picks by CapitalVia: Buy Indian Oil Corp, HPCL

Buy: Indian Oil Corporation Limited (Above Rs 93.40)

Target: Rs 102

Stop loss: Rs 88

Stock is forming a reversal pattern on daily charts along with forming long pin bar candlestick. Stock is showing sign of oversold on RSI indicator. Breakout from the level of 93.40 would lead stock to witness more upward movement. Considering the technical evidence discussed above, we recommend buying the stock above 93.40 for the target of Rs 102, keeping a stop loss at Rs 88 on closing basis. READ MORE

Bulk deals on BSE as on Friday

Bulk deals on NSE as on Friday

FII/FPI & DII trading activity on NSE, BSE and MSEI


Rupee check

(Source: Bloomberg)

Oil check

Oil prices extended losses on Monday, slumping by more than $1 a barrel, as an emergency rate cut by the US Federal Reserve failed to soothe global financial markets panicked by the rapid spread of the coronavirus and mounting economic disruptions.

Brent crude was last off $1.17, or 3.5 per cent, to $32.68 per barrel while US crude slipped 73 cents, or 2.3 per cent to $31 a barrel.

SGX Nifty suggests yet another tepid start for Sensex, Nifty


Asian Market Check

Source: Reuters


US Market Check

Source: Reuters


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