The coronavirus crisis might end up evening out what has so far been a skewed market on Dalal Street, with only a handful of largecaps rising continuously for some time. Since passive ETF money has been the market's main driving force thus far, and such large flows are all dominated by the largecaps, any global outflow from equities would mean money moving out of these stocks. So when Nifty fell 1 per cent last month, NSE100 Midcap and NSE100 Smallcap indices actually gained 6 per cent.
STREET PULSE: Where we stand Nifty futures on the Singapore Exchange traded nearly 70 points higher at 7 am (IST), signalling a possible rebound after Monday's big fall. Elsewhere in Asia, share markets tried to stabilise after a wave of early selling petered out and Wall Street futures managed a solid bounce, allowing investors to take a break from coronavirus fears.
HERE'S WHAT TO WATCH  | South Korea's hard-hit market KOSPI edged up 0.8% and helped MSCI's broadest index of Asia-Pacific shares outside Japan fight back to flat. Nikkei was still down 2.8%, but just catching up to the global sell-off having been shut on Monday. Shanghai blue chips index eased 0.7% but also off early lows. |
| US stocks plunged overnight as the full implications of the virus' spread finally caught up with Wall Street. Dow crashes 3.55%, while the S&P500 lost 3.35% and the Nasdaq 3.71%. Wall Street's fear gauge, the CBOE Volatility Index , jumped to its highest close since early 2019. |
| Crude oil prices steadied after shedding nearly 4% on Monday. US crude was up 22 cents at $51.65, while Brent crude firmed 28 cents to $56.58. |
| The rupee on Monday fell by 34 paise to close at more than three-month low of 71.98 against the US dollar, tracking heavy selling in domestic equities and strengthening of the American currency in the overseas market. |
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NIFTY IN DANGER ZONE… Nifty could soon test the 200-day simple moving average of 11,682.8, with the major support of 12,000 being breached Monday on FII selling across cash and derivatives markets. The FII reaction underscored the panic in global markets about the rapidly spreading corona virus from China to other parts of the world. Derivatives analysts cited the overnight build-up in open interest of the February 27 expiry 11,700 put on Thursday — close to expiry — for their forecast of markets testing the 200-day SMA of 11,682.
Read More FATF GREY LIST HAUNTS FIIs… Mauritius, the tax haven that has been used by foreign investors for three decades to bet on Indian stocks, is now on the 'grey list' of Financial Action Task Force (FATF) — an inter-governmental policymaking body setting anti-money laundering (AML) standards. FATF announced its decision on Friday. With the jurisdiction coming under FATF's close monitoring, India will shut the doors to new FPIs setting up shop in Mauritius but may allow existing FPIs registered with the Sebi to trade till the market regulator takes a final decision on the subject.
Read More RIL DEBT-FREE DREAM HIT… Six months after Mukesh Ambani laid out a road map to make Reliance Industries free of net debt by early 2021, his plan has hit a few bumps thanks to the government. The government has petitioned a court to halt a proposed stake sale by Reliance Industries to Saudi Arabian Oil, threatening a key source of funds needed to pare liabilities. In addition, the conglomerate, which is into oil refining, telecommunications and retail, is also facing unfriendly tax proposals that could hit its businesses.
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ADANI EYES AIR INDIA… With the government pushing for the disinvestment of Air India, industrial conglomerate Adani Group may emerge as one of the bidders for the debt-laden national carrier. According to highly placed sources, the group has held internal rounds of deliberations on whether or not to submit an Expression of Interest and that the discussions are still in the preliminary stage.
Read More BANKS TO VODA AID… Vodafone Idea's lenders met DoT officials over the weekend, cautioning that invoking bank guarantees of the operator against statutory dues will lead to defaults since the telco is in no position to repay the banks. They urged the DoT to come up with a solution to retain a three-player telecom market. The lenders reminded DoT that a bulk of VIL's Rs 57,000 crore dues is supported by guarantees and if they are invoked, the banks will have to pay those to the government on behalf of the company.
Read More Meanwhile... YELLOW METAL GLITTERS… Gold soared as much as 2.8% on Monday to its highest level in seven years, as investors worried about global economic growth in the face of sharply rising coronavirus cases outside China. The curve inversion between the 3-month and 10-year U.S. Treasury bond yields deepened, in what economists view as a recession signal. The benchmark 10-year Treasury yield US10YT=RR fell to its lowest since July 2016.
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