Volatile Day for Indian Indices: Sensex Ends 131 Points Lower Post Rebound; Telecom and Auto Stocks Bleed
Closing

Editor's note: Dear reader, we are now on Telegram! Get our latest views on stock markets and more, instantly. Join our Telegram channel here!


It was a volatile day for India share markets today. The benchmark indices opened higher but turned volatile and erased most of the gains thereafter, even after the RBI in its MPC meet cut the repo rate by 75 bps to 4.40%.

Losses were seen as market participants turned cautious after RBI Governor Shaktikanta Das said that there's a rising probability that large parts of the global economy will slip into recession.

At the closing bell, the BSE Sensex stood lower by 131 points (down 0.4%) and the NSE Nifty stood up by 18 points (up 0.2%).

The BSE Mid Cap index ended the day down 0.3%, while the BSE Small Cap index stood up by 0.3%.

Most of the sectoral indices ended in the red with stocks in the telecom sector, auto sector and oil & gas sector witnessing maximum selling pressure.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 0.56% and the Shanghai Composite was up by 0.26%. The Nikkei 225 was up by 3.88%.

European markets were trading on a negative note. The FTSE 100 was down by 3.97%. The DAX was trading down by 2.19%, while the CAC 40 stood down 3.05%.

The rupee was trading at 75.27 against the US$.

{inlineads1}

Note that the Indian stock market has fallen 36% in just over a month. However, Vijay Bhambwani's subscribers have been saved from a lot of pain in this market.

He's had 16 out of 22 profitable trades in these difficult times and his last 11 trades, over the last six months, have been profitable. He has delivered a return on investment of 42.95% for his subscribers at a time like this when everyone is barely managing to stay afloat due to daily losses.

Vijay will be online for his upcoming event on Monday, 30 March at 5 pm.

The Weekly Cash Summit is where Vijay will share his blueprint for consistently beating the market. Register for free here.

Also, a few days ago, we asked you to participate in Equitymaster's "State of the Markets" poll.

The poll asked you to vote on what holds next for the Indian stock markets amid the gloomy economy and coronavirus fears.

Many of you voted for the same and we thank you for participating. The numbers are in and here are the results.

In news from the macroeconomic space, Moody's Investors Service has more than halved India's 2020 growth forecast to 2.5%. This is within just three weeks of its previous downgrade to 5.3%.

This growth reduction is in sharp contrast to the previous downgrade of 0.1%. Earlier this month Moody's had revised its estimate to 5.3% from 5.4% in February. It had said the country's growth could slow down to 5% if the virus was not contained in its previous update.

According to the Global Macro Outlook 2020-21 released on Friday, the 21-day lockdown announced by Prime Minister Narendra Modi would result in a sharp loss in incomes and further weigh on domestic demand and the pace of recovery.

The report said a general lack of social safety nets, weak ability to provide adequate support to businesses and households, and inherent weaknesses in many major emerging market countries will amplify the effects of the coronavirus-induced shock.

Moody's also sharply revised China's growth forecast to 3.3% this year down from 4.8%. It said that based on the latest high frequency indicators, we estimate that China's economy contracted by around 10% in the first quarter on a sequential basis.

The ratings agency saw growth going into negative territory in major western economies with estimates of contractions of 5.4% in Germany, 4.5% in Italy, 4.3% in the US, 3.9% in the UK and 3.5% in France during the first half of 2020.

{inlineads2}

In other news, the RBI today lowered the key repo rate by 75 basis points (bps) to 4.4%. The move is to help arrest the economic slowdown in the wake of the coronavirus outbreak.

Here are some of the key takeaways from today's RBI policy decision:

The RBI made a sizeable cut in repo rate. It slashed the repo rate by 75 bps. The reverse repo was also reduced by 90 bps and now stands at 4%. This has made the repo rate falling to the lowest ever. Before this, it had hit the lowest point of 4.74% in April 2009 in the wake of the global financial crisis.

Meanwhile, the cash reserve ratio (CRR) has been slashed by 100 bps to 3%.

The six-member Monetary Policy Committee (MPC) voted 4-2 in favour of the reduction of the repo rate by 75 bps, RBI Governor Shaktikanta Das said in an address to media.

The RBI also allowed banks and other lending institutions to extend the repayment schedule and moratorium by three months to avoid large NPAs and reduce risk weights.

The RBI said that the coronavirus pandemic will affect the growth of most sectors. Referring to the illness, Shaktikanta Das said that apart from continuing resilience from agriculture and allied sectors, most sectors of the economy will be adversely impacted by COVID-19, depending upon its intensity, spread and duration.

For liquidity measures, Das said that large selloffs in markets have intensified redemption pressure. The RBI will conduct auctions of long-term repo operation (LTRO) of up to three-year tenure of appropriate sizes for a total amount up to Rs 1 lakh crore at a floating rate linked to the policy repo rate

Deferment of interest on working capital facilities was also announced. As per the RBI, Lending institutions can defer by three months payment of interest outstanding as on March 1 on working capital facilities sanctioned in the form of cash-credit and overdraft and such. The accumulated interest for the period will be paid at the end of the deferment period.

Note that many other central banks have been taking similar measures to relieve their economy from the escalating global coronavirus pandemic.

Earlier this month, the US Federal Reserve lowered the interest rates, bringing it near zero, in another emergency move to help shore up the US economy. The Fed had cut interest rates by half a percentage point on March 3, too, in its first emergency cut since the financial crisis of 2008.

The Reserve Bank of New Zealand (RBA) slashed interest rates by 75 bps to a record low. The Reserve Bank of Australia poured US$ 3.6 billion in liquidity into Australia's financial system and said it was prepared to buy government bonds.

The coronavirus threat has meant sharp losses for global stock markets.

We have written a piece around how deep this impact has been felt in the global financial markets. You can check out the same here: Worst Week for Global Stock Markets: Coronavirus Impact in 10 Points

Tanushree Banerjee believes the ongoing stock market correction could, in fact, be an inflection point for what she calls the irreversible Rebirth of India megatrends.

For bluechip stocks, she believes the time is ripe to begin buying some of the safest bluechips as there is safety in valuations and the market is offering them at deeper and deeper bargains.

The profits of bluechips (BSE 200 companies) are currently at a decade low as can be seen in the chart below.

A Rebound in Profits Overdue?

Tanushree is recommending her subscribers, to buy stocks selectively, a few at a time, by taking partial exposures to begin with.

She has already recommended 4 safe bluechips in the past month and there are several more in her watchlist. You can access them here: Here's How You Could Trade the Coronavirus Crisis Safely (requires subscription)

And if you are not a StockSelect subscriber, here's where you sign up.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.


Indian Indices Erase Gains; Telecom Stocks Under Pressure
12:30 pm

Editor's note: Dear reader, we are now on Telegram! Get our latest views on stock markets and more, instantly. Join our Telegram channel here!


After logging gap-up opening, share markets in India turned volatile and erased most of the early morning gains, even after the RBI in its MPC meet cut the repo rate by 75 bps to 4.40%.

Investors turned cautious after RBI Governor Shaktikanta Das said that there's a rising probability that large parts of the global economy will slip into recession.

The BSE Sensex is trading up by 110 points, while the NSE Nifty is trading up by 76 points.

The BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading up by 0.5%.

Sectoral indices are trading mixed with stocks in the banking sector and finance sector witnessing buying interest, while telecom stocks are witnessing selling pressure.

Note that, since the coronavirus outbreak, all BSE indices and NSE indices are down in the range of 25-35%.

Speaking of sectoral impact, in the article titled: Worst Hit Indian Sectors Amid Coronavirus Pandemic: 10 Points to Know, we dive deeper and look at how the impact has been on individual sectors...

The rupee is currently trading at 74.80 against the US$.

Gold prices are currently trading down by 0.4% at Rs 43,387.

A few days ago, we asked you to participate in Equitymaster's "State of the Markets" poll.

The poll asked you to vote on what holds next for the Indian stock markets amid the gloomy economy and coronavirus fears.

Many of you voted for the same and we thank you for participating. The numbers are in and here are the results.

{inlineads1}

In news from the banking sector, Yes Bank on Thursday said it has increased its fundraising size to Rs 150 billion from Rs 100 billion.

In a late evening release, the bank said it will raise the additional amount through shares, ADRs, GDRs or convertible bonds.

Yes Bank has already raised over Rs 100 billion from State Bank of India (SBI) and other key banks and financial institutions through sale of equity under its reconstruction plan approved by the government and the Reserve Bank of India (RBI).

The RBI has also extended a Rs 600-billion credit line to the private lender for meeting obligations.

Yes Bank share price is presently trading up by 3.7%.

In one of the articles, we have written about the entire timeline of how YES Bank went from a stock market darling to a pariah. Read the article here: How the YES Bank Collapse Unfolded - 10 Points.

Moving on to news from the macroeconomic space, the Reserve Bank of India today, lowered the key repo rate by 75 basis points (bps) to 4.4%, to help arrest the economic slowdown in the wake of the coronavirus outbreak.

The reverse repo rate now stands at 4%, down 90 bps, falling to the lowest ever. Before this, it had hit the lowest point of 4.74% in April 2009 in the wake of the global financial crisis.

The six member Monetary Policy Committee (MPC) voted 4-2 in favour of the reduction of the repo rate by 75 bps, RBI Governor Shaktikanta Das said in an address to media.

Meanwhile, liquidity adjustment facility (LAF) has been reduced by 90 bps to 4% while cash reserve ratio (CRR) has been slashed by 100 bps to 3%.

The central bank advanced the policy review and the MPC met over March 24, 25 and 26 to analyze the situation caused by the unprecedented lockdown of the nation and all business activities.

The RBI also allowed banks and other lending institutions to extend the repayment schedule and moratorium by three months to avoid large NPAs and reduce risk weights.

Earlier, the US Federal Reserve had lowered the interest rates, bringing it near zero, in another emergency move to help shore up the US economy amid the rapidly escalating global coronavirus pandemic.

The Fed had cut interest rates by half a percentage point on March 3, too, in its first emergency cut since the financial crisis of 2008.

{inlineads2}

Many other central banks have been taking the same measures to control coronavirus.

For instance, the Reserve Bank of New Zealand (RBA) slashed interest rates by 75 bps to a record low. The Reserve Bank of Australia poured US$ 3.6 billion in liquidity into Australia's financial system and said it was prepared to buy government bonds.

We will keep you updated on all the news from this space. Stay tuned.

Note that the coronavirus threat has meant sharp losses for global stock markets.

We have written a piece around how deep this impact has been felt in the global financial markets. You can check out the same here: Worst Week for Global Stock Markets: Coronavirus Impact in 10 Points

Speaking of the Indian economy, with the RBI cutting rates by a whopping 75 points, the focus of market participants has now shifted to whether the RBI's rate cut will translate into better economic activity in the near term.

Like this chart shows, RBI rate cuts have always had a big gap with bank lending rates.

Yet Another RBI Rate Cut May Not Result in Lower Lending Rates

Here's what Tanushree Banerjee wrote about it in one of the editions of The 5 Minute WrapUp...

  • It will be a while before lower lending rates stoke the economy.

    Therefore, hoping for an immediate revival in the economy is futile. The RBI has no magic wand to do this.

    Rather look for stocks that can outperform irrespective of the RBI policy.

    I believe the cement sector may be a good place to start.

    One of my recent recommendations from the sector is a typical Rebirth of India stock.

    And I won't be surprised if it repeats its 2002-2006 performance.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.


Indian Share Markets Pare Gains; RBI Cuts Repo Rate by 75 Bps
10:30 am

Share markets in India are off day's high after the RBI's Monetary Policy Committee (MPC) reduced the policy repo rate by 75 basis points to 4.4%.

In view of COVID-19 pandemic, MPC advanced its meeting. MPC met on 24, 26 and 27 March and took care of evaluation of macroeconomic and financial conditions.

MPC voted for a sizable reduction in repo rate and maintaining accommodative stance.

The BSE Sensex is trading higher by 500 points, with IndusInd Bank surging another 15% and Axis Bank up 10%. The Nifty50 index is up 235 points.

All sectoral indices are trading in green, with bank stocks leading the gainers.

In the broader market, the BSE MidCap index and SmallCap index were both up 3% each.

Stay tuned for more updates in the following commentary.


Sensex Opens Over 1,000 Points Up; Banking Stocks Rally
09:30 am

Editor's note: Dear reader, we are now on Telegram! Get our latest views on stock markets and more, instantly. Join our Telegram channel here!


Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.7% while the Hang Seng is up 0.7%. The Nikkei 225 is trading up by 1.2%. Meanwhile, the Dow Jones Industrial Average wrapped up its strongest three days in nine decades on Thursday as record weekly US jobless claims came in below investors' worst fears and the focus stayed on an unprecedented US$2 trillion stimulus awaiting approval by the US House of Representatives.

Back home, India share markets rallied in the opening session ahead of RBI governor press meet. The BSE Sensex is trading up by 976 points while the NSE Nifty is trading up by 334 points. The BSE Mid Cap index and BSE Small Cap index opened up by 3.1% and 2.1% respectively.

All sectoral indices are trading in green with bank stocks and metal stocks witnessing buying interest.

Note that, since the coronavirus outbreak, all BSE indices and NSE indices are down in the range of 25-35%.

{inlineads1}

Speaking of sectoral impact, in the article titled: Worst Hit Indian Sectors Amid Coronavirus Pandemic: 10 Points to Know, we dive deeper and look at how the impact has been on individual sectors...

Note that, stock markets the world over have seen a sharp fall.

The Sensex saw its biggest one-day fall on Monday 23 March.

Is this the Future of Stock Trading?

The coronavirus pandemic has created a sense of fear among investors and traders worldwide.

What is different about this market crash unlike others before it, is the pace of fall.

The Indian share market has fallen more than 35% from its peak in just over a month, which is the fastest crash in history.

{inlineads2}

The sharp decline can be attributed to algorithmic trading as well as foreign institutional investor (FII) outflows.

Co-head of Research, Tanushree Banerjee believes, in this new era of sharp declines, the rebound rally can be equally sharp and quick as well. It is important to remember this.

A part of this decline is due to the coronavirus impact, a part of it is due to external factors as well.

Look at fundamentally strong stocks in this market correction. She believes, these stocks will likely rebound the fastest when the coronavirus threat passes.

Moving on, gold prices are currently trading up by 3.1% at Rs 43,542.

The rupee is currently trading at 74.89 against the US$.

The Indian rupee surged by another 78 paise to 75.16 against the US dollar on Thursday after Finance Minister Nirmala Sitharaman announced various welfare measures to tide through the coronavirus crisis.

The government on Thursday unveiled a Rs 1.7 trillion economic package involving free food grain and cooking gas to poor for the next three months, higher wages to workers and measures to boost liquidity of employees as part of measures to ease the economic impact of lockdown.

Market participants welcomed the government initiatives and said the revival of the economy though welfare measures were very much needed as the slowdown in demand was further hit by COVID-19 pandemic.

The rupee, which opened on a positive note at 75.90, settled for the day with gains of 78 paise at 75.16 against the American currency.

Moving on to the news from the economy. As per ratings agency Fitch, the coronavirus-related worries are likely to aggravate difficulties for Indian banks, revising down the operating environment score for the critical sector by a notch.

The score has been revised to "BB" from "BB " earlier, pointing out that COVID-19 outbreak ups the worries for the sector, which is already reeling under weak business and consumer confidence.

The outlook on the score is "negative", given the uncertainty surrounding the severity and duration of the pandemic, and the associated effects on India's banks of restrictions on economic activity.

The operating environment score was last revised down in 2019 due to the weakness in business and consumer confidence.

The lockdown will impact industrial production and domestic demand. This will exacerbate the economic slowdown of the past few quarters that was partly caused by weaker credit availability from non-bank lenders from September 2018.

It however said the closed nature will help restrict the impact on economic growth in India as compared with Asian peers.

As per the report, Indian banking system is under-capitalised and continues to saddle with bad loans, despite some successes.

It also warned that the retail segment, especially the unsecured ones, may face headwinds as unemployment rises.

Now, how this pans out going forward remains to be seen.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.


Indian Indices End Higher, Rs 1.7 Trillion Relief Package, and Top Cues in Focus Today
Pre-Open

Indian share markets continued their rally yesterday and ended on a strong note.

Benchmark indices rallied for the third day, encouraged by stimulus packages by large economies in order to soften the economic blow from the lockdown of businesses and offices.

At the closing bell yesterday, the BSE Sensex stood higher by 1,411 points (up 4.9%) and the NSE Nifty closed higher by 336 points (up 4%).

The BSE Mid Cap index ended up by 3.5%, while the BSE Small Cap index ended up by 3.7%.

On the sectoral front, gains were largely seen in the telecom sector and banking sector.

With stock markets falling sharply worldwide, what is the best way to protect your investments?

Our special report, How to Trade the Coronavirus Crash, has the answer. Just claim your FREE copy here...

Also, a few days ago, we asked you to participate in Equitymaster's "State of the Markets" poll.

The poll asked you to vote on what holds next for the Indian stock markets amid the gloomy economy and coronavirus fears.

Many of you voted for the same and we thank you for participating. The numbers are in and here are the results.

Sitharaman Announces Rs 1.7 Trillion Relief Package Amid Corona Distress

Addressing the media during market hours yesterday, Finance minister Nirmala Sitharaman announced a slew of measures to deal with the economic distress caused due to the coronavirus pandemic and the subsequent lockdown announced to deal with the situation.

The FM announced the Prime Minister Gareeb Kalyan scheme worth Rs 1.7 trillion, which will have two parts - cash transfer and food security.

Here are some key takeaways from the press conference:

FM announced a Rs 1.7 trillion fiscal stimulus plan to aid the economy's fight against the rapidly spreading coronavirus pandemic. The relief measures included direct cash transfers and food security-related steps aimed at giving relief to the poor workers.

Under this plan, 800 million poor people in the country will get 5 kg of rice or wheat per month free of cost, in addition to the 5 kg they already get. In addition to rice or wheat, each household will get 1 kg of preferred dal for free for the next three months.

The government will pay EPF contribution, both of employer and employee, for 3 months for all those establishments with less than 100 employees out of which 90% earn less than Rs 15,000 per month.

Women Jan Dhan account holders will get an ex-gratia amount of Rs 500 per month for 3 months to run household during this period.

Farmers will get the first instalment of the PM-KISAN payment of Rs 2,000 soon. As per reports, this move will benefit 87 million farmers across the country.

Rs 310 billion welfare fund will be utilized for building and construction workers.

The FM also announced a medical insurance scheme for health workers. This Rs 5 million per individual insurance plan would be applicable to all health workers that includes sanitation and ASHA workers, paramedics, doctors, nurses.

Note that, the finance minister had already announced some measures earlier this week on Tuesday, that included extension of tax deadlines, easing minimum balance norms for savings account, and increasing threshold of insolvency filing to Rs 10 million from Rs 0.1 million.

Top Stocks in Focus Today

From the automobile sector, market participants will be tracking Mahindra & Mahindra (M&M) share price as the company is partnering with two public sector units (PSUs) to work with an existing manufacturer of high-spec ventilators to help them simplify design and scale up capacity, said Pawan Goenka, MD of the company.

This comes a few days after the company's chairman Anand Mahindra announced that the group will offer all possible support to deal with Covid-19 outbreak.

From the banking sector, IndusInd Bank share price will be in focus. The stock of the company rallied over 40% yesterday on expectation of huge stimulus package announcement by the government.

This was the stock's biggest-ever one-day gain.

Apart from IndusInd Bank, shares of most NBFCs and insurance companies rallied yesterday on back of the above news.

From the pharma sector, shares of Caplin Point will be in focus today. The stock was locked in the 20% upper circuit limit yesterday, after the company's arm Caplin Steriles received final approval from the US drug regulator for Verapamil Hydrochloride injection.

Cipla share price will also be in focus today as the company has received final approval for its Abbreviated New Drug Application (ANDA) for Esomeprazole for Oral Suspension 10mg, 20mg and 40mg from the United States Food and Drug Administration (USFDA).

The Case of Falling Rupee Amid Corona Crash

As the coronavirus (COVID-19) pandemic continues to haunt the global financial markets, the rupee remains under pressure after breaching the 75 as well as 76 levels against the US dollar in the past few sessions.

On Monday, the rupee depreciated past the 76-mark against the US currency for the first time ever and settled at 76.16 for the day - within two days of hitting 75 for the very first time.

The rupee had taken 17 months to breach the 75-mark after hitting 74 against the greenback for the first time. In other words, the October 2018 low of 74.48 was not breached until Thursday, March 19.

But how far is the 77-mark against the greenback?

As per the reports, the rupee is now the Rs 76/US$ stage and the next testing point will be 77, which is expected soon. The reason for this is more on the global side with the dollar strengthening and other currencies weakening.

Note that, stock markets the world over have seen a sharp fall. Indian share markets have declined sharply as well.

The Sensex saw its biggest one-day fall on Monday 23 March.

Is this the Future of Stock Trading?

The coronavirus pandemic has created a sense of fear among investors and traders worldwide.

What is different about this market crash unlike others before it, is the pace of fall.

The Indian share market has fallen more than 35% from its peak in just over a month, which is the fastest crash in history.

The sharp decline can be attributed to algorithmic trading as well as foreign institutional investor (FII) outflows.

Co-head of Research, Tanushree Banerjee believes, in this new era of sharp declines, the rebound rally can be equally sharp and quick as well. It is important to remember this.

A part of this decline is due to the coronavirus impact, a part of it is due to external factors as well.

One should look at fundamentally strong stocks in this market correction. She believes, these stocks will likely rebound the fastest when the coronavirus threat passes.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.