History says a major selloff like the one equity markets are seeing globally at the moment is typically followed by a bounce in next three, six or 12 months in a large majority of times; maybe it has not happened only one out of five times. That way, the numbers are on the side of the markets to rebound soon. However, for every country, that bounceback will be different and the pace of it will depend on how the virus spreads. And Mark Matthews of Julius Baer says it is likely markets will price in a September peaking out of the situation.
STREET PULSE: Where we stand Nifty futures on the Singapore Exchange traded 340 points or 3.03 per cent lower at 10,889 at 7am (IST), indicating a major gap-down start for Dalal Street. Elsewhere in Asia, shares fell following another Wall Street rout as disruptions to global business from the coronavirus beyond China worsened, stoking fears of a prolonged world economic slowdown.
HERE'S WHAT TO WATCH  | MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.5%. Australian shares fell 1.86%, while Japan's Nikkei stock index slid 1.45%. |
| US stocks plunged overnight, erasing most of the steep gains in the previous session, as markets remained highly volatile in the face of the fast-spreading coronavirus. Dow ended the day 969.58 points, or 3.5%, lower at 26,121 after tanking nearly 1,150 at its session low. The S&P500 dropped 3.3%, and the Nasdaq 3.1%. |
| Oil slid on Friday as worries about demand for fuel being sapped by the global coronavirus outbreak were heightened by concern over non-OPEC crude producers not yet having agreed to cut output further to support prices. Brent crude fell 47 cents, or 0.9%, to $49.52 a barrel while WTI was down 42 cents, or 0.9%, at $45.48 per barrel. |
| The rupee snapped its four-session losing run on Thursday to close 6 paise higher at 73.33 against the US dollar amid hopes that efforts by countries and global agencies would offset financial damage from the novel coronavirus outbreak. |
| WHO'S |  |
YES BANK SUPERSEDED… RBI has superseded the board of Yes Bank and imposed a month-long moratorium, it said in an announcement late on Thursday. It expects to arrive at a credible restructuring plan in the next few days. "RBI assures the depositors of the bank that their interests will be fully protected and there is no need to panic," it said in a statement. This is the first time the central bank has taken such drastic action with respect to a big bank since July 2004 when the regulator got state-run Oriental Bank of Commerce to take over Global Trust Bank to rescue the private sector lender. The RBI action followed the lender's inability to raise funds that would have helped it provide against loan losses.
Read More FII FLOW CHOKED… The outbreak of novel coronavirus is choking flows into Indian stocks from foreign funds domiciled in Japan, Germany, South Korea and China, said people with direct knowledge of the matter. With the daily functioning of most of these funds in these countries disrupted due to office closures and travel bans, money managers have been deferring investment decisions, waiting for the virus to subside. The four countries put together are home to over 1,500 funds which constitute 10-15% of the foreign portfolio volumes in India.
Read More PF INTEREST RATE CUT… The Employees' Provident Fund Organisation on Thursday lowered interest rate on provident fund deposits for 2019-20 to a seven-year low of 8.5% following a decline in its income. The decision will result in a surplus of more than Rs 700 crore for the fund, labour minister Santosh Gangwar said. The proposed rate is 15 basis points lower than 8.65% announced for 2018-19. The finance ministry will have to vet the interest rate of 8.5% agreed upon by CBT before it is notified by the labour ministry.
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TELCO RELIEF IN WORKS… The government is working on steps to provide relief to the telecom sector that will need to be ratified by the Cabinet, a senior official said, raising the prospect of a possible reprieve for financially-strapped Vodafone Idea, which faces AGR dues of Rs 53,000 crore. On the eve of Vodafone Group CEO Nick Read's visit to India, the official said any package will need to conform to the Supreme Court's AGR ruling.
Read More RBI TO FIGHT CRYPTO VERDICT… RBI is planning to file a review petition in the Supreme Court against the quashing of a central bank circular aimed at curbing cryptocurrencies, said people with knowledge of the matter. The central bank is concerned that the apex court's decision on Wednesday could pave the way for trading in virtual currencies and put the banking system at risk.
Read More Meanwhile... SETBACK FOR KOCHCHAR… The Bombay High Court dismissed a petition by former ICICI Bank CEO Chanda Kochhar challenging her termination. She had argued that the lender had instead agreed to her request for early retirement. The bank is seeking to recover bonuses and benefits given to the former CEO. A division bench of the Bombay HC, comprising Justices Nitin Jamdar and MS Karnik, said Thursday that it was upholding objections by ICICI Bank to Kochhar's plea on the grounds that the termination was under a private contract and it can't be challenged under the HC's writ jurisdiction.
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