Market opens in red: Sensex slips 115 points to 38,509, Nifty below 11,300-mark; IndusInd, Tata Steel among major losers

Sensex was trading 47.12 points, or 0.12 percent, lower at 38,576.58, and the NSE Nifty slipped 10.20 points, or 0.09 percent, to 11,293.10

FP Staff March 04, 2020 10:27:11 IST
Market opens in red: Sensex slips 115 points to 38,509, Nifty below 11,300-mark; IndusInd, Tata Steel among major losers
  • Sensex was trading 47.12 points, or 0.12 percent, lower at 38,576.58, and the NSE Nifty slipped 10.20 points, or 0.09 percent, to 11,293.10

  • The Fed’s surprise move—its first off-schedule cut since the depths of the financial crisis more than a decade ago - followed a massive shift in money market pricing

  • Fed Chairman Jerome Powell noted that the coronavirus "poses evolving risks to economic activity".

The Sensex and Nifty opened on a choppy note on Wednesday tracking persistent foreign fund outflow and tepid cues from global markets as concerns over the economic fallout of coronavirus epidemic continued to weigh on investor sentiment. At 10.20 AM, the Sensex dipped 114.78 points or 0.30 percent at 38,508,92. The Nifty was 25.65 points down or 0.23 percent at 11,277.65 points.

In the opening session, the 30-share index was trading 47.12 points, or 0.12 percent, lower at 38,576.58, and the NSE Nifty slipped 10.20 points, or 0.09 percent, to 11,293.10.

IndusInd Bank, Tata Steel, HDFC Bank, SBI and ICICI Bank were among the top losers, while Bajaj Auto, Asian Paints, Bharti Airtel and HCL Tech were trading with gains.

In the previous session, the 30-share BSE barometer surged 479.68 points or 1.26 percent to end at 38,623.70, and the broader Nifty jumped 170.55 points or 1.53 percent to close at 11,303.30.

On a net basis, foreign institutional investors (FPIs) sold equities worth Rs 2,415.80 crore, while domestic institutional investors bought shares worth Rs 3,135.24 crore on Tuesday, data available with stock exchanges showed.

According to traders, besides incessant foreign fund outflow, the market remained on edge as six people in India were confirmed to be infected by a coronavirus .

Elsewhere in Asia, bourses in South Korea rallied over 2 percent after the country reported a significantly lower increase in the number of fresh coronavirus cases than the day before.

Market opens in red Sensex slips 115 points to 38509 Nifty below 11300mark IndusInd Tata Steel among major losers

Representative image. Reuters

Stock exchanges in China, Hong Kong and Japan were also trading with gains in their morning sessions.

On the other hand, US stocks ended sharply lower on Tuesday, despite a surprise inter-meeting interest-rate cut from the Federal Reserve.

The US central bank cut its benchmark interest rate by a sizable half-percentage point in an effort to support the economy in the face of the spreading coronavirus .

Chairman Jerome Powell noted that the coronavirus "poses evolving risks to economic activity".

The rupee appreciated 24 paise to 72.95 against the US dollar in the morning session.

Global oil benchmark Brent crude futures jumped 1.45 percent to $52.61 per barrel.

Rupee recovers

The rupee recovers 24 paise to trade at 72.95 against US dollar in early deals.

The rupee recovered by 24 paise to 72.95 against the US dollar in early trade on Wednesday, taking heart from the Reserve Bank's assurance that it will take appropriate actions to preserve financial stability in the financial market amid growing coronavirus fears.

At the interbank foreign exchange the rupee opened at 73.10, then gained further ground and touched a high of 72.90 against the US dollar. It was last trading at 72.95, showing a rise of 24 paise over its previous close.

On Tuesday, the Indian currency had fallen by 43 paise to close at a 16-month low of 73.19 against the US dollar amid concerns over the impact of coronavirus .

In a major reprieve for the financial market, the RBI on Tuesday said it is closely monitoring global as well as domestic situation regarding the impact of deadly coronavirus and ready to take necessary action to ensure orderly functioning of financial markets.

Globally, financial markets have been experiencing considerable volatility, with the spread of coronavirus , triggering risk-off sentiments and flights to safe haven, the Reserve Bank of India (RBI) said in a statement.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.09 percent to 97.24.

Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold equity shares worth Rs 2,415.80 crore on Tuesday, according to provisional exchange data.

By the end of Tuesday, 2,981 people died of the COVID-19 and a total of 80,270 confirmed cases of the virus were reported in China, National Health Commission (NHC) reported on Tuesday. The death toll due to the deadly disease across the world mounted to 3,123 and confirmed cases surpassed 91,783, official media here reported.

Asian shares struggle for traction

Asian shares struggled to find footing on Wednesday and bonds held stunning gains, as an emergency rate cut from the US Federal Reserve seemed to stoke rather than soothe fears over the coronavirus ’ widening global economic fallout, according to Reuters.

The surprise 50 basis point cut came with commentary highlighting the limits of monetary policy, and Wall Street indexes fell sharply. Gold surged and the dollar sank.

The yield on benchmark 10-year US Treasuries, which falls when prices rise, hit a once-unimaginable low of 0.9060% and has held just above that level in Asian trade.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent amid choppy trade across the region, though most of the gains were confined to South Korea. Japan's Nikkei .N225 oscillated between flat and modest gains.

“The US Federal Reserve’s attempt to surprise the market may have misfired,” said Kerry Craig, strategist at J.P. Morgan Asset Management in Melbourne. “While the action was intended to steady market confidence, the sharpness of their reaction and the off-schedule timing of the move could be interpreted as the Fed being much more concerned about the economic impact than first thought.”

Australia's S&P/ASX 200 index fell 1.5 percent, while stocks in Hong Kong and China traded flat. Korean stocks bucked broader weakness, rising 2 percent after the government announced a stimulus package of 11.7 trillion won ($9.8 billion) to mitigate the impact of the virus outbreak.

Futures for the S&P 500 ESc1 were volatile as the results of Democratic Party primaries came in, eventually firming 1 percent as moderate Joe Biden looked set to win five big states compared with two for radical Bernie Sanders.

The US 10-year Treasury yield steadied at 0.9861 percent.

The dollar touched a five-month low against the safe-haven Japanese yen and slipped against most other Asian currencies.

“Given the way that the market’s reacted, it’s telling you that there’s a little bit of panic,” said Andrew Gillan, head of Asia ex-Japan equities at Janus Henderson in Singapore. “They’re a bit worried that interest rate cuts are not going to make a massive difference...and what’s going to be required is probably going to be more fiscal stimulus,” he said, his fund having invested, for example, in Chinese cement and construction stocks in anticipation of more government support measures.

Limits of monetary policy

The Fed’s surprise move—its first off-schedule cut since the depths of the financial crisis more than a decade ago - followed a massive shift in money market pricing.

Futures swung rapidly late last week to expect such a cut at the Fed’s March meeting. Now they imply another 50 basis points of easing by July, even as the investors and the Fed itself raise questions about the efficacy of easing to deal with a public health crisis.

“We do recognise that a rate cut will not reduce the rate of infection, it won’t fix a broken supply chain; we get that,” Fed Chairman Jerome Powell told reporters at a press conference.

The remark sent Wall Street from the positive territory into the red. Dow Jones industrial average .DJI, Nasdaq composite .IXIC and S&P 500 .SPX each closed down close to 3%.

More than 3,000 people have been killed by the coronavirus , about 3.4 percent of those infected - far above seasonal flu’s fatality rate of under 1 percent.

It continues to spread quickly beyond the epicentre in China, with Italy overnight reporting a jump in deaths to 79 and South Korea reporting more than 500 new cases on Wednesday.

“The question here is whether a conventional interest rate response is sufficient,” said Sameer Goel, chief strategist, Asia macro, at Deutsche Bank in Singapore.

“It’s not an economic shock, it’s a shock driven by a non-economic factor. It’s still not clear how big the problem ultimately is, or could be, and until you know that, it’s hard to know how much medicine to apply to it.”

In currencies, the US dollar fell across the board, sending it to an eight-week low against a basket of currencies, while pushing the euro to an eight-week peak.

In Asian trade, the yen hit its highest against the greenback since October, at 106.84 per dollar, before paring gains. The Australian dollar advanced to $0.6603.

Oil prices firmed on expectations of production cuts, with Brent rising 90 cents to $52.79 per barrel LCOc1 and US crude up 1.9 percent at $48.06 a barrel CLc1.

Gold rose 0.2 percent to $1642.21 an ounce

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

SBI PO recruitment 2020: Registration process to fill 2,000 probationary officer posts closes today, apply at sbi.co.in
India

SBI PO recruitment 2020: Registration process to fill 2,000 probationary officer posts closes today, apply at sbi.co.in

SBI will release the admit card for the PO prelims exam in the third week of December on its official website

Mumbai court rejects Deepak Kochhar's bail plea in ICICI Bank-Videocon money laundering case
India

Mumbai court rejects Deepak Kochhar's bail plea in ICICI Bank-Videocon money laundering case

Special PMLA judge PP Rajvaidya rejected the "regular'' bail application of Deepak Kochhar filed on merits of the case as against technical grounds