Sensex, Nifty recover from early losses amid coronavirus concerns, Donald Trump visit fails to fire markets; NTPC, ONGC among top gainers

  • After opening over 150 points higher, the 30-share index was trading 108.80 points, or 0.27 percent, higher at 40,472.03 at around 10.15 am

  • HCL Tech was the top loser in the Sensex pack, followed by Sun Pharma, Titan, Tech Mahindra and Bajaj Auto

  • According to traders, global equity markets were still unnerved by the spread of coronavirus to countries beyond China

Equity benchmark indices opened on a volatile note on Monday tracking tepid cues from global markets amid concerns over the impact of coronavirus epidemic on world economy.

The shares were later slightly higher as Asian markets steadied after a steep sell-off a day earlier, while US President Donald Trump’s two-day visit to the country failed to boost sentiment.

After opening over 150 points higher, the 30-share index was trading 108.80 points, or 0.27 percent, higher at 40,472.03 at around 10.15 am. Similarly, the NSE Nifty was trading up by 24.35 points, or 0.21 percent, at 11,853.75.

 Sensex, Nifty recover from early losses amid coronavirus concerns, Donald Trump visit fails to fire markets; NTPC, ONGC among top gainers

Representational image. Reuters

HCL Tech was the top loser in the Sensex pack, followed by Sun Pharma, Titan, Tech Mahindra and Bajaj Auto. On the other hand, NTPC, ONGC, HUL, Asian Paints and Tata Steel were trading with gains.

In the previous session, the Sensex settled at 40,363.23, dropping 806.89 points or 1.96 percent -- the second-biggest one-day fall in 2020, while the broader NSE Nifty sank 251.45 points or 2.08 percent to 11,829.40.

Meanwhile, on a net basis, foreign institutional investors (FPIs) sold equities worth Rs 1,160.90 crore, while domestic institutional investors bought shares worth Rs 516.21 crore on Monday, data available with stock exchanges showed.

According to traders, global equity markets were still unnerved by the spread of coronavirus to countries beyond China.

“Markets are mostly on a contagion mode due to coronavirus. There has been a little bit of correction. If the Asian markets are up that’s a little bit of good news for other markets,” said Naveen Kulkarni, head of research at Reliance Securities.

“There is nothing major in the works as far as an imminent trade deal between the U.S. and India is concerned,” he added.

Trump said on Monday the two countries will sign defence deals worth $3 billion and that both sides were at the early stages of reaching an “incredible” trade agreement.

 

The blue-chip Nifty 50 index has fallen over 4 percent from its 20 January record intraday high of 12,430.50, weighed down by the coronavirus outbreak and a lacklustre federal budget.

Rupee rises 18 paise to 71.80

The rupee appreciated by 18 paise to 71.80 against the US dollar in early trade on Tuesday tracking gains in domestic equity market and weakening of the American currency in the overseas market.

Forex traders said the appreciation in the rupee was largely on the back of some selling in the US dollar by banks and importers.

At the interbank foreign exchange the rupee opened at 71.84 and touched a high of 71.80, registering a rise of 18 paise over its previous close.

On Monday, rupee had settled for the day at 71.98 against the US dollar.

Asian shares try to stabilise

Meanwhile, Asian share markets were trying to stabilise on Tuesday after a wave of early selling petered out and Wall Street futures managed a solid bounce, allowing investors to take a break from coronavirus fears.

Asia-Pacific shares outside Japan inched up 0.2 percent, while E-mini futures for the S&P 500 bounced on Tuesday after the index suffered steep losses overnight.

Some dealers cited a Wall Street Journal report on a possible vaccine as helping sentiment, though human tests of the drug might not start until the end of April.

Whatever the cause, E-Mini futures for the S&P 500 bounced 1 percent to pare some of the steep 3.35 percent loss the cash index suffered overnight.

South Korea's hard-hit market edged up 0.8 percent and helped MSCI's broadest index of Asia-Pacific shares outside Japan fight back to flat.

Japan's Nikkei was still down 2.8 percent, but just catching up to the global sell-off having been shut on Monday. Shanghai blue chips eased 0.7 percent but also off early lows.

European and US stocks had suffered their biggest loses since mid-2016 amid fears the coronavirus was morphing into a pandemic that could cripple global supply chains and wreak far greater economic damage than first thought.

The risks were such that bond markets were wagering central banks would have to ride to the rescue with new stimulus.

Futures for the Federal Reserve funds rate have surged in the last few days to price in a 50-50 chance of a quarter-point rate cut as early as April. In all, they imply more than 50 basis points of reductions by year-end.

Central banks across Asia have already been easing policy, while governments have promised large injections of fiscal stimulus, something western countries might also have to consider.

The Dow had ended Monday down 3.55 percent, while the S&P 500 lost 3.35 percent and the Nasdaq 3.71 percent. Wall Street's fear gauge, the CBOE Volatility Index, jumped to its highest close since early 2019.

Underlining the economic impact of the virus was a 3.5 percent drop in Apple Inc as data showed sales of smartphones in China tumbled by more than a third in January.

Bonds bay for rate cuts 

The coronavirus death toll climbed to seven in Italy on Monday and several Middle East countries were dealing with their first infections, feeding worries it could turn into a pandemic.

“If travel restrictions and supply chain disruptions spread, the impact on global growth could be more widespread and longer lasting,” said Jonas Glotermann at Capital Economics.

“While we still think that it would take a significant deterioration in the outlook for the U.S. economy for policymakers to cut rates, they may feel compelled to do so if the virus spreads and leads to continued falls in the stock market and inversion of the Treasury yield curve.”

The rush to bonds left yields on 10-year Treasury notes at 1.40%, down almost 20 basis points in just three sessions and paying less than overnight rates. Yields were now rapidly approaching the all-time low of 1.321% hit in July 2016.

The sharp drop, combined with the simple fact the Fed had far more room to cut rates than its peers, kept the U.S. dollar restrained after a run of strong gains.

The euro edged up a little from recent three-year lows to reach $1.0858, while the dollar was back at 110.90 yen and away from a 10-month top of 112.21.

 

With inputs from agencies

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Updated Date: Feb 25, 2020 11:08:33 IST