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Week Mar 16 - Mar 20, 2020

 
Market Pulse
Markets - Last Week

Indian as well as global equity markets continued to witness sharp sell-off as investors fretted over the Coronavirus spreading globally as well as in India. Recovery on Friday, however led to some respite.  

 

On the domestic front, as per media sources, initial temperature readings by the Indian Meteorological Department (IMD) suggests neutral El-Nino conditions over the Pacific Ocean for the months of May-July 2020. Neutral El Nino is likely to result in normal rainfall for India in the upcoming monsoon season 2020 and bodes well for the domestic agriculture sector and domestic economy in general.  

 

Globally, US and European markets ended lower as the coronavirus fears accelerated. 

 

The Nifty ended the week down 12.2% WoW, at 8745.  

 

Brent crude was down 9.5% WoW at US$30.6/barrel.

Week ahead

Going ahead, government measures to revive growth and updates on Coronavirus are expected to weigh on market sentiments .    

Markets - Last Week

US data: The number of US citizens filing new claims for unemployment benefits showed a significant increase, pointing towards weakening of labour market. Initial claims for state unemployment benefits increased 70,000 to a seasonally adjusted 281,000 for the week ended March 14, 2020.

Auto sector: Auto dealer body FADA has filed a fresh appeal in the Supreme Court to extend the deadline for registration of BS-IV vehicles by two months to May 31, 2020. FADA's request comes amid sharply lower customer walk-ins and enquiries for BS-IV vehicles at the retail level given the Covid-19 spread. A practical relaxation could be in order due to the unforeseen nature of the present circumstances. Currently, only inventory in the 2-W segment is a cause of concern, with the industry comfortably placed in the PV and CV segment.

BFSI sector: As per media sources, in a move to provide respite regarding corona-virus outbreak, the RBI may relax bad loan classification rules for banks by 30-60 days.

Media & Telecom sector: The cabinet approved the telecoms department's statement seeking 20 years for operators to pay adjusted gross income (AGR), Union Minister Sanjay Dhotre reported to Parliament on Thursday. The Supreme Court will hear the government's bailout plan to grant telecommunications companies a 20-year reimbursement period for AGR fees during the next scheduled hearing after two weeks. Secondly, with regards to multiplex industry, theatres in Karnataka, Odisha & select cities of Maharashtra have been closed till March 31 amid Coronavirus outbreak. With fears of Coronavirus, further risks of screens closure in remain interim period in other places, which will be a negative. However, postponement of release (like Sooryavanshi and possibly other big movies) is likely to only result in deferral of revenues, which later could be recouped.

Textile industry: As per media reports, the Confederation of Indian textile industry has requested the government to immediately announce a relief package for the textile and apparel sector to mitigate the crisis being faced by the industry, post the Coronavirus spread. Apart from domestic markets, major exporting markets such as EU and the US has severely impacted the sector. 

Jewellery industry: As per media reports, gold/jewellery sales during auspicious days such as Gudi Padwa and Ugadi are expected to remain muted. With closure of stores and high gold prices, offline sales are expected to be severely impacted with decline of 50-80%. The companies may enhance its focus on online channel to boost gold sales.

Agriculture sector: As per media sources, initial temperature readings by the Indian Meteorological Department (IMD) suggests neutral El-Nino conditions over the Pacific Ocean for the months of May-July 2020. It also suggests mild La-Nina conditions for the month of August- September 2020. Neutral El Nino is likely to result in normal rainfall for India in the upcoming monsoon season 2020 and bodes well for the domestic agriculture sector and domestic economy in general. IMD is stated to release its first official monsoon forecast sometime in the middle of next month i.e. April 2020.

Retail sector: As per media reports, the Retailers Association of India (RAI) has urged the government to provide 90 days Grace period for statutory dues such as GST, advance tax. It has also sought moratorium for 120 days from banks on internet payments and instalments.