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Week Mar 02 - Mar 06, 2020

 
Market Pulse
Markets - Last Week

Indian equity markets continued their downward trajectory as investors fretted over the Coronavirus spreading globally as well as in India.  

 

On the domestic front, data released by the RBI regarding sectoral deployment of credit for January 2020 reveals that total advances were up 8.5% YoY to ~Rs 89 lakh crore. Deceleration was witnessed across categories with a substantial slowdown in the industry segment at 2.5% YoY vs. 5.2% YoY in January 2019. Further, traction in the services sector witnessed moderation at 8.9% YoY vs. 23.9% YoY in January 2019, primarily led by the NBFC segment at 32% YoY vs. 48.3% YoY in January 2019.  

 

Globally, US as well as European markets closed flat to lower amid dampening of investor confidence due to the negative impact of coronavirus on global economic growth.  

 

The Nifty ended the week down 1.9% WoW, at 10989.  

 

Brent crude was down 3.6% WoW at US$48.7/barrel, given the global growth concerns owing to Coronavirus.

 
Week ahead

Going ahead, macroeconomic data points and the update on Coronavirus would weigh on market sentiments.    

Markets - Last Week

US data: The number of US citizens filing new claims for unemployment benefits showed a decline, pointing towards a strengthening of the labour market. Initial claims for state unemployment benefits declined 3,000 to a seasonally adjusted 216,000 for the week ended February 29, 2020.

RBI: Data released by the RBI regarding sectoral deployment of credit for January 2020 reveals that total advances were up 8.5% YoY at ~Rs 89 lakh crore. Deceleration was witnessed across categories with a substantial slowdown in the industry segment at 2.5% YoY vs. 5.2% YoY in January 2019. Further, traction in the services sector witnessed moderation at 8.9% YoY vs. 23.9% YoY in January 2019, primarily led by the NBFC segment at 32% YoY vs. 48.3% YoY in January 2019.

Auto sector: Media reports say a parliamentary panel has suggested lowering GST rate on the auto space till the sector revives along with uniformity in road taxes levied by different states. While the line of thought of the panel is a welcome one and in sync with industry's long standing demand, ultimate authority to make changes in GST rates lies with the GST Council. If such a decision comes through, it would help lower the cost of vehicle ownership and help revive sluggish volumes being experienced by the industry, at present.

Pharma sector: The Directorate General of Foreign Trade (DGFT) has restricted export of 13 active pharmaceutical ingredients (API) and their formulations amid supply issues stemming from the Coronavirus outbreak. The restricted list comprising some vitamins, antibiotics and paracetamol implies that companies will have to get permission from the government before exporting these products.

Liquor industry: The Karnataka government has hiked the excise duty on liquor by 6% to deal with a fund crunch from pending payments and a reduction in the state’s share under the Fifteenth Finance Commission's calculations. With this hike and with effective enforcement and regulatory measures, the department is expected to achieve the target of Rs 22,700 crore fixed for FY21. The measure is negative for liquor volumes and margins. Secondly, as per media sources, IMFL in Uttar Pradesh will now be sold in aluminium cans instead of glass bottles. The packaging of aluminium cans will have a positive effect on the environment and will also end the problem of adulteration of alcohol. 

Telecom sector: Media reports indicate that the Department of Telecommunications (DoT) is unlikely to hold the next spectrum sale before the July-September quarter, beyond its March-April timeline, keeping in mind the financial health of operators who are still battling the adjusted gross revenue (AGR) crisis. Secondly, media reports indicate that the government is working on steps to provide relief to the telecom sector that will need to be ratified by the Cabinet.

Oil & gas sector: India’s annual refined fuel demand is expected to rise 3.1% YoY in FY21, as per government data. Secondly, IEX will launch Indian Gas Exchange, a natural gas trading platform where spot and forward contracts at Dahej, Kakinada and Hazira will be offered s.