The stock markets continued their journey southward and ended the session in red down by 2 percent dragged mainly by selling pressure in BFSI stocks despite gains in global peers and reversal in crude oil prices. Investor sentiments continued to weigh amid uncertainty over coronavirus pandemic and its economic impact. With fresh cases of CoronaVirus rising day by day, concerns over the looming economic recession are keeping Investors on edge.
Factory activity data, released on Thursday said it grew at a slowest pace in four months, also dented sentiments. BFSI heavyweight stocks like Kotak Bank, ICICI bank, HDFC among others were among top contributors in today's decline.
However, healthy gains in pharma stocks like Cipla, Lupin among others restricted the downfall. Broader indices, too, were under selling pressure ending with cuts down by 1.4 percent. The market is expected to continue to be volatile till there is clarity on the situation after the lockdown ends on 14 April, 2020.
The Sensex tumbled 674 points on Friday, weighed by losses in banking stocks as unabated spike in new COVID-19 cases fuelled uncertainty over the economic impact of the pandemic. After hitting a low of 27,500.79 during the day, the 30-share BSE barometer ended 674.36 points or 2.39 per cent lower at 27,590.95.
The NSE Nifty shed 170 points, or 2.06 per cent, to finish at 8,083.80.
Axis Bank was the top loser in the Sensex pack, cracking over 9 per cent, followed by IndusInd Bank, ICICI Bank, Titan, SBI, Maruti, HDFC and Asian Paints.
On the other hand, Sun Pharma, ITC, ONGC, M&M and Tech Mahindra were among the gainers.
Sumeet Bagadia, Executive Director, Choice Broking said, finally the Nifty settled its weekly closing at 8,083-level with the loss of 170 points and even below its support of 8,100 which shows some concern during upcoming trading sessions. "Moreover, we have seen last moment selling pressure due to three days off in the market. The COVID-19 spread is also increasing its pressure as the number of infected people has risen to more than 1 Million in recent days as unemployment numbers from the US are also at a worrying level. Technically support comes at 7,800 while resistance comes at 8,500.
Paras Bothra, President of Equity Research, Ashika Stock Broking said the domestic markets ended lower as India battles to restrict the number of new COVID-19 cases and Prime Minister Narendra Modi has called for the formulation of a common exit strategy to ensure a staggered re-emergence of the population once the 21-day lockdown ends. "Sluggish auto sales figures, falling tax revenues, weak manufacturing data for March, expected rise in NPAs and a sharp rebound in oil prices have kept India on tenterhooks. Barring FMCG and Pharma, other indices succumbed to selling. At close, the Sensex was down 674.36 points or 2.39 percent at 27590.95, and the Nifty was down 170.00 points or 2.06 percent at 8083.80".
Fears of economic recession keep investors on edge
With fresh cases of novel coronavirus mounting by the day, concerns over a looming economic recession kept investors on the edge, traders said.
The Asian Development Bank warned on Friday that the COVID-19 pandemic could cost the global economy $4.1 trillion as it ravages United States, Europe and other major economies. It also said that India's economic growth rate will slip to 4 percent in the current fiscal, PTI said.
The number of COVID-19 cases in India has crossed 2,300 while the death toll rose to 56, according to the Health Ministry.
The number of confirmed coronavirus cases around the world has soared past one million and fatalities have topped 50,000 as the US reported the highest daily death toll of any country so far.
Bourses in Shanghai and Hong Kong ended in the red, while those in Seoul and Tokyo closed with mild gains.
Stocks in Europe were also trading with significant losses in early deals.
On the currency front, the rupee depreciated 55 paise to 76.15 against the US dollar in intra-day trade.
Brent crude futures, the global oil benchmark, rallied 8.15 per cent to USD 32.36 per barrel amid hopes that Russia and Saudi Arabia will end a price war by slashing crude output.
Trading hours revised for various markets
The Reserve Bank of India (RBI) on Friday revised the trading hours for various markets to minimise the risks and to ensure that market participants maintain adequate checks and supervisory controls while optimising thin resources and ensuring safety of personnel, ANI reported.
The trading hours for various markets have been revised from 10 AM to 2 PM.
— ANI (@ANI) April 3, 2020
Indian shares in world capital cap below historic average
A report by Motilal Oswal said India's share in the global market capitalisation is below the historic average.
Currently, it is at 2.2 percent below its historic average of 2.5 percent.
The 'Bull & Bears' report also noted that India's market cap has declined more, compared to the fall in the world market cap in the past 12 months. "Over the last 12 months, the world's market cap has decreased 12.3 per cent ($9.6 trillion), while India's market cap is down 31 per cent," it said.
The report also noted that the market cap-to-GDP ratio of India has declined swiftly from 79 per cent as on FY19 to 54 percent (FY20EGDP), much below its long-term average of 75 per cent and closer to the levels last seen during FY05 and FY09.
On the market performance in the FY 2019-20, it said: "The Nifty could not have had a worse finish to FY20. As the coronavirus (COVID-19) pandemic spread across the world, the Nifty nosedived 23 per cent in Mar 20 to close at 8,598 (-26 per cent YoY), the worst since Oct'08."
While funds from domestic institutional investors at $17.9 billion, against $10.3 billion in FY19 were robust in FY20, inflows from foreign institutional investors (FII) were weak at $1 billion.
It noted that the Nifty is trading at a 12-month forward return on equity (RoE) of 15 per cent, above its long-term average of 14.5 percent.
It also said that 80 percent of the Nifty companies are trading at discount to their historical averages
On the private banking sector, the report said that business environment remains under challenging due to the coronavirus pandemic.
"Over the past few years, corporate lending was muted resulting in systemic loan growth being largely driven by the retail segment. However, the outbreak of COVID-19 has led to weakening of credit demand in consumer retail, MFI and SME/business banking segments," it said.
Loan growth of private banks is likely to moderate to 14 per cent, in FY21 against the previous projection of 18 per cent. Moderation in business growth and the recent reduction of 75 basis points in the repo rate will have a bearing on margins as floating retail and SME loans linked to the external benchmark get re-pricedimmediately while deposits re-price with a lag effect.
Among the private banks, the Motilal Oswal report said that IndusInd Bank and RBL Bank will be the most vulnerable to asset quality challenges, and thus, credit cost should rise significantly, IANS reported.
On the public sector banks (PSB), it said that the consolidation of PSBs is a positive move from a long-term perspective, whichwill improve their competitiveness.
"However, this will come with its own set of challenges in the near term related to credit growth, higher credit cost, integration issues, etc. The outbreak of COVID-19 has further weakened credit growth of PSBs."
State Bank of India's (SBI) loan growth is likely to moderate to 8 per cent while for Bank of Baroda, it is likely to moderate to 7 per cent over FY21.
PSBs have relatively higher share of exposure in the SME segment, and thus, asset quality should remain under pressure in the near-term.
--With inputs from agencies
Updated Date: Apr 03, 2020 16:37:22 IST