Monday, 16 March 2020

SGX Nifty signals D-Street rebound | Wall Street sees third worst fall | FPI outflows hold up RBI rate cut

MORNING NEWSLETTER

17 Mar, 2020 | 08:34 AM IST


Good Morning!

While domestic stocks are getting sold off in this market mayhem like there is no tomorrow, one investor class remains gung-ho: retail players putting money into equities through the SIP route. They have been the force behind the DIIs, many of whom have braved strong FII outflow to buy stocks selectively through this downturn. The question is: will these investors, too, capitulate if this stocks slide prolong? The selloff has been quite painful for one and all, and it's only a matter of time before everybody throws in the towel. That is when the market will probably bottom out.

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STREET PULSE: Where we stand
Nifty futures on the Singapore Exchange traded some 100 points higher at 7am (IST), signalling a possible rebound on Dalal Street. Elsewhere in Asia, most markets fell a day after Wall Street's historic market rout, with fleeting initial gains evaporating as the coronavirus remained a major risk to economic growth. Read More

    MSCI's broadest index of Asia-Pacific shares outside Japan gave up early gains to trade 0.43% lower. Nikkei slid 2.79% and South Korea's KOSPI was off 3.2%. Australian shares were up 0.5% although this followed a massive plunge of almost 10% on Monday.

    US stocks witnessed their third-worst fall ever overnight, with the S&P500 index alone eroding $2.69 trillion in market capitalisation. Dow Jones fell 2,997 points, or 12.93 per cent, to 20,188; the S&P500 index lost 324 points, or 11.98 per cent, to 2,386; and the Nasdaq 970 points, or 12.32 per cent, to 6,904. However, US stock futures rose 1.16% early in Asian trading, through the gains were not enough to ease investor concern

    Oil rebounded as investors bought at bargain levels after prices plunged to four-year lows. Early Tuesday, WTI traded at $30.00 a barrel, up 4.53 per cent, while Brent was up 2.96 per cent at $30.94 after crashing more than 10 per cent overnight to below $30 a barrel for the first time in four years.

    The rupee lost about half a per cent to close at 74.27 to the dollar on Monday amid overseas fund outflows. It had closed at 73.91 last week.

WHO'S

LOOK, WHAT'S STALLING RBI RATE CUT… Foreign investors are selling Indian bonds at one of the fastest paces in Asia, making a decision to cut interest rates that much more complicated for the central bank. RBI Governor Shaktikanta Das refrained from easing on Monday, when central banks from New Zealand to South Korea had implemented emergency rate cuts to tackle the fallout from the coronavirus outbreak. One reason for RBI's reluctance may be worries that deeper rate cuts could worsen outflows and weaken the rupee. Read More

BIG GROWTH HIT FEARED… India's economic growth could take a hit of up to half a percentage point in FY21 because of the disruptions caused by the Covid-19 outbreak, early estimates by the government suggest. But independent economists see a deeper cut of up to one percentage point. "There will be a hit of 0.3-0.5% on the GDP in the next fiscal year," said one of the officials aware of the estimate "Growth in the first two quarters of the next fiscal could be as low as 4-4.5%," another official added. Read More

FOREIGN ARRIVALS BANNED… India has banned all arrivals from the European Union, the UK and Turkey from March 18 till the end of this month as part of fresh curbs announced on Monday to contain the Covid-19 outbreak. "No airline shall board a passenger from these nations to India with effect from 1200 GMT on March18. The airline shall enforce this at the port of initial departure," said a government statement issued after a meeting of the group of ministers (GoM) on Covid-19, headed by health minister Harsh Vardhan. Read More

WHO'S WHO IN YES BANK MESS… ED has summoned the promoters of all major corporates who were borrowers of YES Bank for questioning. They include Anil Ambani, Subhash Chandra, Naresh Goyal, Gautam Thapar, Sameer Gehlaut and Peter Kerkar, apart from DHFL's Wadhawan brothers Kapil and Dheeraj. While the Wadhawans have been served with fresh summons for Tuesday, Essel Group chairman Subhash Chandra and Jet Airways founder Naresh Goyal have been called to appear on Wednesday. Reliance Group chairman Anil Ambani has been issued a fresh summons for Thursday along with Peter Kerkar, director of Cox & Kings (India). Indiabulls Housing Finance promoter Sameer Gehlaut has been asked to come in on Friday and Gautam Thapar, promoter of the Avantha Group, has been called on Saturday. Read More

LOOK WHO'S

GOVT, RBI IN PRE-EMPTIVE STRIKE… The government and RBI have taken several preemptive measures to deal with the economic situation arising from the novel coronavirus outbreak and will do more if necessary, principal economic advisor Sanjeev Sanyal has said. The government has put in place several pre-emptive measures to ensure there is no disruption to supply chains by speeding up customs and port clearances for specific goods including active pharmaceutical ingredients, and now it will focus on ensuring adequate cash flow in the system, he said. Read More

QIP RELAXATION AHEAD… Sebi on Monday proposed to relax the requirement of the mandatory six-month gap between two successive Qualified Institutional Placement (QIP) issues. The proposal was discussed by Sebi's expert committee on primary markets. To address concerns of companies and to support fundraising, relaxation may be provided for successive QIPs within six months of previous QIP issues, in cases where terms of placement for the subsequent issues are disclosed upfront in the special resolutions. Read More

SC TO RULE ON AGR RELIEF… The government has filed an application in the Supreme Court, requesting that telcos be allowed to spread the payment of AGR dues over 20 years or less, at a reduced interest rate of 8%, in a bid to prevent an "adverse impact" on the economy, jobs and millions of consumers. The application said the formula was arrived at after widespread consultations at government levels, including the Cabinet; keeping in mind vital issues related to the financial health and viability of the telecom sector. Read More

Meanwhile...
RBI SWAPS TO BOOST LIQUIDITY… RBI on Monday unveiled more liquidity measures to ensure smooth functioning of the financial markets that have been roiled by the Covid-19 outbreak. But it didn't follow other central banks in slashing interest rates, keeping its powder dry for more effective intervention later on. The central bank announced another dollar-rupee swap — similar to the one it conducted on Monday — to stabilise the currency market and long-term repo operations for ensuring sufficient liquidity. Read More
KEY INDICES
13,695  -912.8
11,095  -666.03
23,101  -2065.3
12,451  -1087.75
Price Movers|Volume Movers|Near 52 Week High|Near 52 Week Low

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Stocks to Watch >>>

    Hindujas have asked RBI that they be allowed to raise their stake in private sector lender IndusInd Bank to 26% from the mandated 15%, citing the relaxation granted to Uday Kotak recently

    Blackstone Group and Salarpuria Sattva have jointly acquired a 3.3 million sq ft office park, Global Village Tech Park, in Bengaluru owned by Coffee Day Enterprises for Rs 2,500 crore

    RBI on Monday said the resolution framework for Yes Bank is underway and depositors can withdraw their money from the evening of March 18.

    The National Anti-Profiteering Authority has ordered Patanjali Ayurveda to pay up Rs 75.08 crore for not passing on benefits of GST rate reduction on to consumers,

    Vodafone Idea on Monday paid another tranche of Rs 3,354 crore to the government, taking its total AGR payments to Rs 6,854 crore, or its full principal dues as per its self-assessment.

    Global rating agency Moody's has upgraded YES Bank's long-term foreign currency rating from "Caa3" to "Caa1" on bail-out package involving fresh equity capital infusion.

UnQuote: SAILING THROUGH
If RBI infuses liquidity, India can weather this crisis well
Saurabh Mukherjea, Marcellus Investment Managers

The DAY PLANNER

    Japan Jan Industrial Output
    UK Dec Employment Change
    US NAHB Housing Market Index
    US Feb Industrial Production Print
    US Feb Retail Auto Sales
    Euro Area Q4 Wage Growth

OUTLOOK
MUTUAL FUND: INVEST IN LUMPSUM
    Sunil Subramaniam of Sundaram Mutual says as FPIs sell, domestic fund managers is expected to step in and buy and arrest the fall. "Domestic fund managers are just waiting to see whether there is going to be an even greater fall, so that they can buy these good quality stocks at cheaper prices. Mutual fund investors should not panic. Ideally, they should break their SIPs and put all the money as a lumpsum," he says. Read More

BONDS: HAVE LONGER HORIZON
    Lakshmi Iyer of Kotak Mutual Fund says like stocks, bond market is also witnessing a similar paranoia. "We have seen high-grade or blue chips equivalents yields go up by almost 100 bps on the corporate bond side. Government bond yields have not come down at the pace at which they should have come down. These are fantastic entry opportunities from a yield perspective. But have a longer investment horizon," says she. Read More

STOCK PICKING: LOOK AT FINANCIALS
    Rahul Chadha of Mirae Asset Global says keep some powder dry and there will be opportunity to buy into India in next two to three weeks. "In parts of markets, in sectors like consumer staples, valuations are still expensive. From a longer-term perspective, the risk-reward may not be that favourable right now. Should the risk appetite normalise, one may use part of that to add to financials, one may use part of that to add to real estate stocks," says he. Read More

STOCKS RECOMMENDATIONS
Info Edge (India) Ltd. 17 Mar, 2020 | 08:32 AM IST SellSell
Pfizer Ltd. 17 Mar, 2020 | 07:49 AM IST buyBuy


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