India has had a very narrow market past two years. While the benchmark indices looked good, the smallcap and midcap world were actually in a sort of bear market. Even at the Nifty level, only about 10-15 stocks did well. So as and when the mess in the banking sector gets cleaned up, credit cycle comes back, exports begin to grow and earnings revive, the market breadth will finally come back, and that will happen in a big way. This is where prudent investors will have a lot of opportunities to play on.
STREET PULSE: Where we stand Nifty futures on the Singapore Exchange traded nearly 100 points down at 7 am (IST), signalling a possible meltdown ahead on Dalal Street. Elsewhere in Asia, shares fell this morning as a US warning to Americans to prepare for the possibility of a coronavirus pandemic drove another Wall Street tumble and pushed yields on safe-haven Treasuries to record lows.
HERE'S WHAT TO WATCH  | MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6%, while Australian shares dropped 1.77% and Japan's Nikkei 1.1%. |
| US stocks plummeted for the second straight day on Tuesday, adding to Monday's sharp losses as news about the spread of coronavirus gripped jittery investors. Dow tanked 879 points, or about 3.2%, bringing the index's total loss over the past four days to about 2,267. S&P500 fell 3%, more than 7% below its most recent high, while the Nasdaq slipped 2.8% |
| Oil prices recovered some recent losses in Asia, but there are lingering concerns that expected output cuts by major oil producers will not be enough to offset a decline in global energy demand caused by the virus. U.S. crude ticked up 0.58% to $50.19 a barrel. |
| Snapping its three-day losing streak, the rupee on Tuesday recovered 13 paise to close at 71.85 against the US dollar amid easing crude oil prices and weakening of the US currency in the overseas market. |
| LOOK WHO'S |  |
ADVANTAGE FMCG… The price ratio of Nifty FMCG index and Nifty has dropped to 2.5, a level at which the index for consumption stocks finds strong support. Usually, the ratio rebounds to 2.7-2.9 in the following three to seven months after it drops to the support level of 2.4-2.5. For instance, the price ratio slipped to 2.5 in May 2017 and rebounded to 2.89 by July 2017. Antique Broking said the price ratio is closer to support levels, indicating a higher probability of outperformance in the FMCG index over Nifty.
Read More TRADE DEAL IN THE WORKS… US President Donald Trump on Tuesday indicated that the much-awaited "big trade deal" with India could be concluded towards the end of the year, while reaffirming his stand that India charges the "highest tariffs". Addressing a press conference after official talks, Trump referred to the impending trade deal, saying it was within grasp. "If the trade deal happens with India, it will be towards the end of the year," he said.
Read More RELIEF FOR MAURITIUS FPIs… Sebi on Tuesday said FPIs from Mauritius will remain eligible for registration, assuaging concerns that arose over the island nation being put on the 'grey list' of the Financial Action Task Force (FATF). "FPIs from Mauritius continue to be eligible for FPI registration with increased monitoring as per FATF norms," the market regulator said in a release. Top officials of custodian banks said the regulator had softened its earlier stand on the matter. Market participants had been worried that this would make it harder for FPIs based in Mauritius to get Sebi registration.
Read More | WHO'S |  |
EARNINGS ESTIMATES CUT… Earnings estimates of more than half the top 300 Indian companies have been downgraded by analysts at brokerages in the last one month, according to an ET study based on Bloomberg estimates. Analysts said the downgrades have been led by companies in energy, healthcare, metals and financials after their earnings fell below estimates in the December quarter. Among 50 companies in the Nifty, 20 failed to meet earnings forecasts while 19 beat estimates. Analysts say such cuts in earnings expectations could further accelerate in April as the Marchquarter results too are likely to disappoint.
Read More LTRO MAY NOT WORK… RBI may have offered cheap liquidity to lenders through long-term repo operations, but the programme's success depends on their ability to push credit, especially at a time when demand remains tepid and the industry's retail focus raises concentration risks. On Monday, RBI's offer for Rs 25,000 crore of one-year money was subscribed 4.9 times. Economists said though RBI measures have been able to cool off bond yields, there are doubts whether it will lead to higher credit availability.
Read More Meanwhile... MNC ROYALTY GROWTH DROPS… The gap between the growth in royalty payments made by MNCs to their parent companies and the growth in their financials has narrowed over the past three years, found a study of 31 such companies in India. The growth in pre-royalty profits before tax (PR-PBT) of these companies was higher than that of the royalty paid by them in 2017 and 2018. In 2019, there was a marginally higher growth in royalty as compared to the PR-PBT. This was the result of sharper investor scrutiny.
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