MARKET WRAP: Sensex slips 674 pts, financials hit; Nifty settles at 8,084

Topics Markets | Coronavirus | MARKET WRAP

Brokers trade at their computer terminals at a stock brokerage firm in Mumbai. Photo: Reuters
Continuing their downward trend, the benchmark indices settled with over 2 per cent loss on Friday as coronavirus (Covid-19) cases showed no signs of abating. Global confirmed cases surpassed 1 million on Thursday with more than 52,000 deaths. Back home, an ongoing 21- day lockdown has already brought the economy to a standstill.

The S&P BSE Sensex ended at 27,591, down 674 points or 2.39 per cent amid heavy selling in financial stocks such as ICICI Bank (down 7.5 per cent), HDFC (over 5 per cent), HDFC Bank (down 2 per cent), and Axis Bank (down over 9 per cent). The other major contributors to the index's loss were Infosys, TCS, and Asian Paints. They all fell in the range of 3-5 per cent. 

India VIX cooled-off over 8 per cent to 55.01 levels. On the other hand, the Nifty50 index ended at 8,084, down 170 points or over 2 per cent. In the broader market, the S&P BSE MidCap index declined over 1 per cent lower at 10,219 whereas the S&P BSE SmallCap closed at 9,409, down over 1 per cent.

Among sectors, pharma stocks continued to rally. The Nifty Pharma index rose around 5 per cent to 7,362 levels with 8 out of 10 constituents advancing. Nifty FMCG index, too, ended in the green - up 0.7 per cent at 26,538 levels. 

On a weekly basis, the S&P BSE Sensex lost 7.46 per cent, while the Nifty50 slipped 6.65 per cent.

RBI cuts money market timing

Meanwhile, the Reserve Bank of India (RBI) has cut timing for money market operations from 9am to 5pm to 10am till 2pm. Truncated hours will be in operational till April 14.

Global markets

European stock markets slipped on Friday, erasing meagre gains for the week, as more companies flagged a hit to business from the coronavirus pandemic while oil prices extended their previous day's gains on hopes of a global supply cut. With virus-fighting lockdowns raising the risk of a prolonged global downturn, investors continued to seek the safety of the US dollar and government bonds, pushing US Treasury yields near their lowest in three weeks.

With over a million people infected worldwide, there were more signs the pandemic would take a massive toll on economic growth. Morgan Stanley said the US economy will shrink 5.5% in 2020, the steepest drop since 1946, with a huge 38% contraction predicted for the second quarter.

The pan-European STOXX 600 index was down 0.4%, taking MSCI'S All Country World Index down 0.3%. MSCI's Asia-Pacific index outside Japan dipped 0.6% while Japan's Nikkei erased earlier gains to end flat. US stock futures sank nearly 1 per cent.

Brent crude futures gained 3.64% to $31.03, extending Thursday's record 24.7% surge , while US West Texas Intermediate (WTI) crude fell 0.83% to $25.11.

(With inputs from Reuters)


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

The Indian markets opened and stayed negative, with reduced volatility. A ratings downgrade for the Banking sector, due to the impact of Covid-19 and ensuing stressed asset concerns, impacted the financial stocks. FIIs were net sellers to the tune of Rs 1,100 crore, on April 1, and show no signs of reversal. Markets are trading uncertainty, regarding the spread of the virus in India, as hope emerged of infections peaking in some of the worst affected global markets.

Sectoral losers and gainers on the NSE

MARKET AT CLOSE | Top losers and gainers on the S&P BSE Sensex


The S&P BSE Sensex ended at 27,591, down 674 points or 2.39 per cent while NSE's Nifty50 ended at 8,084, down 170 points or over 2 per cent.


NEWS ALERT | OPEC+ producers debate possible oil cuts of 10 million barrels per day: Reuters quoting sources

The OPEC+ crude oil exporter group is debating cutting global supply by 10 million barrels per day (bpd), an OPEC source said on Friday, adding that any further cuts must include producers from outside the alliance. US President Donald Trump on Thursday said he had brokered a deal that could result in Russia and Saudi Arabia cutting output by 10 million to 15 million bpd, representing 10-15% of global supply. Trump said he made no offer to cut US output. 

Rupee trades near day's low

Nifty Energy Index trades in the green

ALERT :: Market holiday

Stock market will remain closed on Monday, April 6, on account of Mahavir Jayanti

STOCK ALERT :: Maruti Suzuki declines for sixth straight session

Nifty Bank index tumbles over 1,000 pts

BROKERAGE RADAR | ICICI Securities on Aurobindo Pharma

Due to Sandoz deal deal being called off, we cut our EPS estimates by 11-12% for FY21E, FY22E. Broadly, besides losing out on one of the cheapest M&A bargains in the US generics space (~1x sales, ~5x EBITDA), the company will be losing the manufacturing base in US that could have been critical in the current scenario when some key facilities in India are facing cGMP issues. On the margins front, there will not be much difference as according to the management (going by the assertion in some earlier conference calls), the margin profile of this portfolio was more or less similar. There will be some solace on the balance sheet front though as debt level was expected to double post this deal, which will not happen now. Overall, as the anxiety has been put to rest, focus will now shift to the business front, especially the lingering cGMP issues. Regarding Covid-19, as of now there is no material impact on the business, according to the management. We maintain HOLD on the stock and arrive at a target price of Rs 435 (8x FY22E EPS of Rs 54.4).

Nifty FMCG index trades over 1% higher in an otherwise weak market

Index contributors at this hour

STOCK ALERT :: RBL Bank hits record low

MARKET UPDATE :: Nifty slips below 8,100-mark

MARKET UPDATE:: Sensex at day's low, down over 700 pts

Apollo Hospitals surges 9% in a weak market

NEWS ALERT :: Singapore announces lockdown for a month

European markets trade lower

Source: Reuters

MARKET VOICE:: Ambareesh Baliga

Most active stocks by volume

DELTA CORP 72.15 4.95
ST BK OF INDIA 178.30 -4.45
RBL BANK 112.05 -14.69
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More pain ahead for the auto sector? Here's what top brokerages say

Disruption in wholesale dispatches due to the COVID-19 lockdown was far higher than our estimate. Bulk of the billing happens towards the latter part of the month, which was adversely affected by the sudden lockdown from 25 March. Apart from this, transition to BS-6 and supply constraints affected volumes, especially for two-wheelers (2W) and medium heavy commercial vehicles (MHCVs), said Nomura. READ MORE 

MARKET UPDATE | Indices see sharp recovery

BROKERAGE RADAR | Kotak Securities on IT sector

We expect a muted March 2020 quarter largely on account of loss of billings from Covid-19 led lockdowns in India and developed markets towards the end of the quarter. FY2021 outlook is hazy as economic consequences of Covid-19 filter through deceleration/ decline in global IT spending and consequently revenues of IT services companies. We expect revenue decline for our coverage universe in FY2021. Despite the weak outlook, IT services stocks offer value and reasonable returns on normalized multiples. Infosys is our top pick followed by Tech Mahindra and HCL Technologies  

Oil check :: Brent crude surges 6% on report OPEC+ to meet on April 6

MARKET UPDATE | ITC surges over 7%

NEWS ALERT :: Lenders agree to extend deadline for submitting bids for DHFL to May 7: sources to CNBC TV18

Alert: Deadline to submit bids was to end on April 16

SECTOR WATCH :: Nifty Pharma index surges over 5%; Lupin, Sun Pharma top gainers

NEWS ALERT :: OPEC+ leaders to meet on Monday, April 6, reports Bloomberg

NCR, Mumbai stare at up to $1.7bn per week loss due to shutdown: Barclays

While the cities under a severe state of lockdown are experiencing a greater amount of absolute economic loss right now, Barclays believes if the lockdown becomes uniformly severe in other cities, the economic costs for small open economies, where megacities tend to dominate activity, will rise rapidly. READ MORE  

Covid-19 impact: Consumer lending may be most disrupted by lockdown

Growing weakness in traditional retail lending pockets such as home loans and vehicle loans, prompted banks to diversify into consumer loans. Among banks, HDFC Bank leads the segment, closely followed by ICICI Bank and Axis Bank. RBL Bank too, with its tie-up with Bajaj Finance for credit cards was steadily capturing the segment. READ MORE

BROKERAGE VIEW:: ICICI Securities on Hospitals sector

Adjusting for this tough time, from a holistic point of view, we continue to remain positive on the hospitals space as a structurally evolving story with moderating capex and improvement in profit margins and return ratios in most of the cases besides favourable macros. We will continue to engage with the managements for further updates. Apollo and Narayana continue to remain our top picks in the hospitals space.

Currency check :: Re hits a low of 76.3/$

Investment Strategy by ICICI Securities

>> The current sharp sell-off has not flattened the P/B – RoE line thereby indicating quality continues to get a premium and in the event of further drawdown such
stocks could continue to fall less.

>> High dividend yield stocks with stable businesses such as utilities will be attractive propositions in a declining interest rate environment. It is virtually impossible to time the market but in the event of a turnaround, beta stocks which are well capitalized to see through the short term demand shock and have value creating profile in the past (RoE > ke) will provide significant alpha during the recovery.

Top picks:

Large caps: HUL, Abbott, NTPC, Bharti Airtel, HDFC Bank, BPCL;

Midcaps: Akzo Nobel, JB Chemical, CESC, Cholamandalam Investment and Finance, Astral Poly Technik

BROKERAGE VIEW:: Prabhudas Lilladher on Aurobindo Pharma

ARBP has mutually terminated its proposed acquisition of Sandoz asset (Novartis generic subsidiary). ARBP planned to acquire a part of Sandoz’s generic business including oral solid and dermatology products in CY18 while expecting to wind up the deal by CY-20 March with USFTC’s approval. With US$1,200m sales, ARBP agreed for the deal value of $US900mn and an additional payment of US$100m based on revenue milestones with the entire amount was to be funded by debt. While our estimated earning has not discounted potentials from Sandoz deal, we placed ARBP ‘UNDER REVIEW’ (from Sell earlier) as we would revisit current risk-return matrix. ARBP trades at 7.5x PE of FY22E versus 5-year trailing average of 11x PE.

Covid-19 impact: S&P downgrades Tata Motors ratings, keeps outlook stable

"The impact of COVID-19 on the global automotive market will make a large dent in the recent good progress that JLR's management has made in steering the business back to profitability and improving credit metrics. In turn, this would delay the improvement we had expected in Tata Motors' credit profile," S&P said in a statement. READ MORE

PSBs rescue pvt peers as states pull out deposits after RBI cut rates

The certificates of deposit (CD) market has sprung to life following the Reserve Bank of India’s (RBI’s) unscheduled monetary policy last Friday, after being almost dormant for nearly a month.
Treasury heads say private banks are floating CDs of nearly Rs 5,000- 8,000 crore a day since the RBI lowered the repo and reverse repo rate last week, with these issuances being bought by public sector banks (PSBs), though at high rates. READ MORE

ETFs liquidate at quickest pace since 2017 as coronavirus roils markets

A tumultuous start to 2020 saw exchange-traded funds (ETFs) shutter at the fastest pace in almost three years. A total of 72 ETFs with $1.4 billion in assets shut down and returned their money to investors in the first quarter as the coronavirus outbreak roiled markets, according to the data compiled by Bloomberg. That’s the most since the third quarter of 2017, which saw 73 funds close. READ MORE

Sovereign wealth fund holdings under heavy pressure as oil prices crash

Such funds, instituted by many — including oil-producing countries — to meet future needs, were largely seen as a stable source of capital. Ironically, the crash in oil prices has raised fears of liquidation, which could add to market volatility.
The share of such funds among overall foreign holdings had risen over the last 18 months, shows the depository data. READ MORE

Cipla surges 8% on completing Phase-3 study of asthma generic drug

The Phase-3 study was conducted over a period of 15 months, at over 100 sites in the US enrolling 1400 asthma patients, it added. According to IQVIA (IMS Health), Advair Diskus and its generic equivalents had US sales of approximately US$2.9bn for the 12-month period ending February 2020. READ MORE

BROKERAGE VIEW:: Centrum Wealth on Cement sector

We have assessed the impact of the shutdown in the country and the expected slowdown following certain assumptions of the severity of COVID 19 pandemic across the country. In the changed scenario and with cut in earnings estimates in FY21/FY22 (discussed in detail below) adjusted to the revised valuations following sharp correction we have revised our rating upwards of companies including ACC and JK Cement. Our top picks continue to be Ultratech Cement and Ramco Cements. We are also positive on Ambuja Cements given the attractive valuations.

BROKERAGE VIEW:: Emkay Global Financial Services on Consumer Durables sector

  • The ongoing lockdown and its impact on the economy in the near term have led to 8-39% cut in our FY21-22 earnings estimates for both consumer electrical and durable companies. We bake in zero business in April and a gradual recovery from Q2FY20.
  • We have not assumed an increase in working capital cycle due to the liquidity crunch faced by the distribution channel. Weak demand and tight liquidity could also lead to price disruption in an effort to liquidate existing inventory (especially for summer products).
  • Although it is difficult to assess when the demand will be fully recovered, we believe that companies with dependence on seasonal products and B2B segments will take longer to recover. In our coverage universe, this could adversely affect Havells.
  • We prefer Crompton and Dixon, and have Buy rating on both. We maintain Hold on Blue Star, V-Guard and Voltas, while the risk of delayed recovery and premium valuations lead us to downgrade Havells, Whirlpool and Amber to Hold.

India VIX drops over 4% to 57 levels

Auto stocks decline as March sales plunge amid coronavirus lockdown

Shares of automobile companies declined as much as 7 per cent on the NSE on Friday as the March sales numbers disappointed, largely due to the nationwide lockdown to prevent the spread of coronavirus. According to a Business Standard report, the country’s automobile sales are down by an average 64 per cent as all manufacturing plants have been shut since the lockdown announced on March 24. READ MORE

BROKERAGE VIEW:: Emkay Global Financial Services on Aurobindo Pharma

TP: Rs 420 (12 months) | Rating: HOLD |  Upside: 7%

We lower our estimates for FY21/22 by 4%/1% as we moderate our revenue assumptions due to Covid-19 (hit on injectables/OTC due to reduced hospital footfalls, shipment delays, lesser production etc.). We arrive at revised TP of Rs420, valuing the stock at 8x Mar’22 EPS (vs. 10x earlier). ARBP is an Underweight (UW) in Emkay Alpha Portfolio (EAP).

Market check

Indian rupee may stabilise in 2021, to stay weak in near-term: Poll

"There is further INR weakness in store before it eventually stabilizes as global calm returns once (the) COVID-19 impact peaks and global coordinated policy measures start to kick into growth, which is at a multi-year low in India," said Madhavi Arora, lead economist, FX and rates at Edelweiss Securities. READ MORE

NEWS ALERT | Cyient in pact with Hitachi Rail for series of project engineering services: BSE filing

SECTOR WATCH :: Nifty Metal index trades weaker

CORONAVIRUS UPDATE:: Total cases in India rise to 2,183

Amid coronavirus lockdown, gold finance companies may be less impacted

There is no doubt that both financiers have also faced operational disruption due to the lockdown; they have shut their branches. There could be some asset quality pressure as well. However, the highly liquid collateral (gold)-backed loans with typical asset tenure of less than 12 months and pricing power (to pass on higher costs) should augur well. READ MORE

NEWS ALERT | Abbott's rapid diagnostic commercial kits to arrive in India by April third week: CNBC TV18

-- allows for test results in 15 minutes

BROKERAGE VIEW:: ICICI Securities on Pharma sector

We believe COVID-19 will not have any significant impact on pharmaceutical industry although near term pressures are plausible. Large correction in stocks would provide opportunity to add at reasonable valuations. Our top picks are Cipla, Abbott India and Torrent Pharma.

IndusInd Bank, SBI tumble as Moody's downgrades sector outlook to negative

Among individual stocks, IndusInd Bank tanked 7.3 per cent to Rs 317 on the NSE. Besides, Bandhan Bank declined 5 per cent, ICICI Bank (5.6 per cent), SBI (4 per cent), and Punjab National Bank (3.6 per cent). Canara Bank, Bank of Baroda, Axis Bank, RBL Bank, HDFC Bank, and Union Bank of India slipped between 2 and 4.3 per cent. READ MORE

BROKERAGE VIEW:: ICICI Securities on Logistics sector

We hosted Mr. Chawla, promoter of Chawla Roadlines (link), for a group investor call. Few points which stood out are: i) Driver/labour migration and the uncertainty around their return, ii) already weak ‘used CV’ economics, further impacted by lockdown-driven demand impact, iii) industry nursing hope of waiver of insurance fee and road cess for a few months, formal banking channel communication on waiver of EMIs for the next two months and iv) domestic demand drop to sag any appetite of fleet addition in near/medium term. While fuel price drop may be propitious for the sector, as Mr. Chander Agarwal (MD TCI Express) highlighted subtly as one of the participants, fuel cess has already reached Rs12/litre and may move up further as activity resumes. We would continue to highlight our pecking order in the sector i.e. TCI Express, Mahindra Logistics and VRL Logistics.

BROKERAGE VIEW:: Motilal Oswal Financial Services on Coal India

TARGET PRICE: Rs 202 (+45%) | RATING: Buy

We cut our FY21/22 adj. EBITDA estimate by 24%/5%, given the sharp fall indemand. However, we expect COAL to tide over the situation in the near term, given its large cash position (net cash: ~INR300b). We value the stock on 3.5x Sep’21E EV/EBITDA (v/s 4.5x FY21E EV/EBITDA earlier), given the uncertainty surrounding demand recovery, implying a target price of INR202/sh. The stock trades attractively at ~2x FY22E EV/adj. EBITDA (v/s historical average of 7x), P/E
of 5x (v/s average of ~13x), and offers a dividend yield of ~8%. Maintain Buy.

Gold outlook by Hareesh V, Head Commodity reseach at Geojit Financial Services

Gold prices are likely to stay firm as the ongoing fears of the health crisis due to the deadly pandemic can lead to a global recession. Monetary and fiscal stimulus measures taken by various central banks may also lift the sentiments of gold like safe havens. Meanwhile, a strong dollar and moderate physical demand are likely to limit major rallies.
Technical Outlook: As long as prices stay above$1585, we can expect upticks to continue towards the next obstacle of $1645 initially followed by $1670 later. However, a close below $1445 is a signal of reversal of the current bullish momentum.

How to identify which time frame suits your trading behaviour?

Technical analysis helps in developing trading strategies for various time frames. This could be for a week, fortnight or a month. Depending on the analysis, one can take a long or short position for various time schedules. Broadly, a trader who looks for short-term gains hold positions for a week or fortnight, whereas those eyeing bigger gains hold positions for a month. Outlook for a month To look for monthly opportunities, the major indicator that highlights a trend is the moving average. READ MORE

BROKERAGE VIEW:: Sharekhan on Hero MotoCorp

The stock has corrected by 20% over the past one month and is currently trading at a discount to both the valuations seen during the global financial crisis (GFC) and to its long-term historical average. Hence, we upgrade our recommendation to Buy with a price target (PT) of Rs. 2,200.

OMCs, paint stocks decline after oil posts biggest one-day gain; ONGC rises

Shares of oil marketing companies (OMCs), paints and aviation companies were trading in the negative territory on Friday, a day after the crude oil prices posted their biggest-one day gains on record after US President Donald Trump said he expects Russia and Saudi Arabia to announce a major oil production cut, and Saudi state media said the kingdom was calling an emergency meeting of producers to deal with the market turmoil. READ MORE

ADB cuts India growth estimate to 4% for FY21 amid global Covid-19 pandemic

India's economic growth is likely to slow down to 4 per cent this fiscal on the back of the current global health emergency, Asian Development Bank said in its outlook for financial year 2020-21 on Friday. Growth in India will remain subdued after the country suffered a sharp slowdown last year, from 6.1 per cent in fiscal 2019 to 5 per cent, as a credit crunch that originated in the non-banking financial sector severely hampered bank lending , the Manila-based lender said. READ MORE

Expert speak: Samir Arora on diversification

MARKET CHECK:: Sensex fails to recover from opening lows

Bajaj Finance extends gains

Aurobindo Pharma bounces 12% off opening lows

Nifty Pharma index trades higher in a weak market

Nifty Bank top sectoral loser, dips 3%

Bajaj Auto falls 3% as March sales decline 38% YoY

PVR hits 52-week low; declines 41% in 7 sessions

InterGlobe Aviation trades lower

Jubilant Foodworks trades over 4% lower

RBL Bank trades with 2% cut

>> t said it witnessed strong operating profit trajectory during the period and that its net interest income (NII) has hit all-time high. Liquidity position remains comfortable and Cost of deposits and cost of funds are lower on sequential basis. It further noted that Covid-19 continues to be a concern.

Reliance Industries pares early gains

>> Reliance Industries (RIL) on Thursday said its board has approved a proposal to raise up to Rs 25,000 crore via non-convertible debentures (NCDs).

Sector Watch :: OMCs under pressure


Sectoral trends at NSE at open | Banks, financial stocks slide

Sensex Heatmap at Open | RIL, HUL provide support to a weak market



NEWS ALERT :: PM Modi urges to show solidarity to fight Covid-19

March Auto Sales :: Bajaj Auto's sales decline 38% YoY

Top gainers and losers at S&P BSE Sensex during Pre-Open

Market at Pre-Open

Market at Pre-Open

NEWS ALERT :: PM Modi begins his address

FY20 IN REVIEW : Equity fundraising jumps 62%, over Rs 20k cr raised by IPOs

As many as 26 companies — with approval from the Securities and Exchange Board of India (Sebi) — are looking to raise nearly Rs 26,056 crore from IPOs, while another six companies — yet to receive Sebi nod — have IPO fundraising plans of Rs 7,500 crore. READ MORE

Coronavirus outbreak: World Bank approves $1-bn emergency fund for India

"In India, $1 billion emergency financing will support better screening, contact tracing, and laboratory diagnostics; procure personal protective equipment; and set up new isolation wards," the World Bank said after its Board of Executive Directors approved the first set of emergency support operations for developing countries around the world, using a dedicated, fast-track facility for COVID-19 response. READ MORE

Stocks to watch today

Oil-linked stocks: Oil-sensitive stocks such as paints, gas explorers, refiners, oil marketing companies (OMCs), tyres, and aviation are expected to remain in focus today as crude oil prices posted their biggest-one day gains on record on Thursday after President Donald Trump said he expects Russia and Saudi Arabia to announce a major oil production cut, and Saudi state media said the kingdom was calling an emergency meeting of producers to deal with the market turmoil.
RIL: Reliance Industries (RIL) on Thursday said its board has approved a proposal to raise up to Rs 25,000 crore via non-convertible debentures (NCDs). READ MORE

Global stocks rally as oil gains offset coronavirus concerns; Dow up 2%

World equity markets climbed on Thursday on a surge in risky assets like oil, offsetting concerns over an increasing death toll from the coronavirus pandemic that is expected to push the global economy into recession. Investors sought the safety of the US dollar and government bonds. Stocks and oil futures were among the few risk assets that advanced, with oil benchmarks surging 20 per cent after US President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war. READ MORE

Oil posts biggest one-day gains after Trump touts Saudi-Russia deal

Crude prices posted their biggest-one day gains on record on Thursday after President Donald Trump said he expects Russia and Saudi Arabia to announce a major oil production cut, and Saudi state media said the kingdom was calling an emergency meeting of producers to deal with the market turmoil. Trump said he had spoken to Saudi Crown Prince Mohammed bin Salman, and expects Saudi Arabia and Russia to cut oil output by as much as 10 million to 15 million barrels, as the two countries signaled willingness to make a deal. READ MORE

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

Bulk deals on NSE as on Wednesday

Bulk deals on BSE as on Wednesday

Rupee check

Source: Bloomberg

US crude futures trim record gain

>> Benchmark US crude fell more than 1% in early trade on Friday, coming off its biggest one-day gain in the previous session after US President Donald Trump said he expected Saudi Arabia and Russia to announce a major oil production cut.
>> US West Texas Intermediate crude futures were down 1.4%, at $24.96 a barrel, while Brent Crude was down 3% to hover around $29/bbl. 

SGX Nifty

>> At 8:00 am, the index was trading at 8,224 level, down  0.6 per cent.

Asian markets look to follow Wall Street

Source: Reuters

Oil jump lifts Wall Street

Source: Reuters

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