The havoc played by the coronavirus on Indian markets is sentiment-driven and has less to do any disruption in the economy. It has been mainly due to outflow of leveraged money and ETF flows, which are getting redeemed as these investors have gone into risk-off mode, forcing fund managers to sell. At the economy level, very few sectors that depend on supplies from China will see disruption. At the margin, India in fact tends to benefit, because some of the Chinese manufacturing can shift here over time.
STREET PULSE: Where we stand Nifty futures on the Singapore Exchange traded nearly 60 points higher at 7 am (IST), signalling a possible rebound on Dalal Street. Elsewhere in Asia, the rout in stocks deepened, with investors rattled by weekend data from China that showed its fastest ever contraction in factory activity, raising fears of a global recession from the coronavirus.
HERE'S WHAT TO WATCH  | MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%. Japan's Nikkei opened 1.3% lower at a six-month trough. Australia's S&P ASX/200 fell 3% and New Zealand's NZ50 slid 3% into correction territory. |
| Dow futures fell more than 200 points on Sunday in signs that more turmoil on Wall Street is likely this week amid reports the coronavirus is spreading rapidly. Last week, the Dow Jones industrial average tumbled more than 3,500 points, or 12%, its worst week since the 2008 financial crisis. The S&P 500 index slid 11.5%. |
| Oil prices pared losses after earlier hitting multi-year lows on Monday as hopes that a bigger than expected production cut from OPEC and stimulus from central banks could offset economic gloom from the coronavirus outbreak. Brent crude rose by 65 cents to $50.32 a barrel, while WTU crude hit a 14-month low of $43.32 a barrel, before recovering to $45.23 |
| The rupee on Friday slumped to a six-month low of 72.27 against the US dollar, tracking a rout in domestic equities. |
| WHO'S |  |
BEAR HUG… Almost 60% of the BSE 500 stocks are trading below 200-day moving averages amid the rout in global markets as the coronavirus scare has spread to several countries around the world. Among them are PSU banks, NBFCs and select telecom companies. Nifty itself is trading below its 200-DMA. Experts warned that more stocks could fall into a bearish trend if the panic selling because of the virus scare continues. Since 200-DMA is a long-term average, it is considered a major support level for an index or stock. Reliance Capital, Vodafone Idea, Indian Bank and PNB Housing Finance are 40-82% away from their 200-DMAs.
Read More STOCKS AT RISK… Stocks with significant overseas ownership could be headed for an extended bear run if there is an encore to the selling seen last week, with foreign funds dumping Indian equities worth $1.5 billion to send local indices into a pronounced decline. Among the 80 of the BSE500 stocks where FPIs held more than 25% stake, 45 have already declined between 5% and 20% last week. Those stocks shedding more than 15% include Prestige Estates, Gayatri Projects, Piramal Enterprises, Sobha Developers and REC. Fund managers said the passive money flying away from emerging markets is likely to affect FPI-heavy stocks in case the outflow intensifies.
Read More PHONE SUPPLIES DRY UP… Supplies of iPhones and other handset brands are running low at shops in India as disruptions stemming from the Covid-19 outbreak in China start to bite. Also hit are Xiaomi, TCL and Realme phones, said multiple cellphone and electronic retailers. In the past week to 10 days, only 10-20% of the usual number have been sent to stores, they said. Apple is the worst hit with many stores saying the iPhone 11series has almost dried up as have some models of the Apple Watch, according to three senior industry executives. TCL and Xiaomi televisions, too, are in short supply and Xiaomi is postponing its entry into air-conditioners by a few weeks. The fourth-largest smartphone brand Realme is facing a squeeze on the supply of new smartphone models like the C3 and 5i.
Read More | LOOK WHO'S |  |
QUALITY UNHURT… The current equities rout from Tokyo to Toronto hasn't spared Mumbai. But quality stocks on Dalal Street haven't collapsed. Credentialed consumer franchises such as HUL, Titan, Asian Paints and Gillette have only fallen in the range of 0.5% to 1.7% this past week, even as the benchmark Nifty fell 5.3%. Other popular names in the outperformer club include HDFC AMC, Colgate and Avenue Supermarts. Analysts say the sell-off triggered by the coronavirus panic doesn't appear to have affected quality stocks that continue to have robust consumer demand.
Read More OIL A REASON TO SMILE… India's oil import bill is expected to shrink sharper than previously estimated 6% as the increasing spread of Covid-19 across the globe has depressed crude oil prices to below $50 a barrel, industry insiders said. The oil ministry's petroleum planning and analysis cell had estimated that crude oil import bill would decline 6% to $105 billion, or Rs 7,43,900 crore, in 2019-20 from $112 billion, or Rs 7,83,200 crore in the previous year. Since the beginning of 2020, crude oil prices have contracted by a quarter from $66 a barrel to under $50 a barrel on Friday.
Read More Meanwhile... GST MOP-UP SHORT OF TARGET… Goods and services tax collections for February stood at Rs 1.05 lakh crore, falling short of the Rs 1.15 lakh crore target set by the government but grossing 8% more than the revenue collection for the same month last year. It was the fourth consecutive month when GST collections crossed Rs 1 lakh crore. Of the total Rs 1,05,366 crore, central GST stood at Rs 20,569 crore, state GST at Rs 27,348 crore and integrated GST at Rs 48,503 crore, which included Rs 20,745 crore collected on imports, the revenue department said in a statement on Sunday.
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