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Markets to get weak start amid rise in crude oil prices
Feb-20-2020

Indian markets snapped four-day losing streak and ended higher on Wednesday after the Finance Minister Nirmala Sitharaman said that the government would announce measures to tackle the financial fallout from the coronavirus outbreak. Today, the start of session is likely to be weak amid lackluster trade in Asian peers and rise in crude oil prices overnight. There will be some cautiousness with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that the coronavirus outbreak will have a limited impact on India but the global GDP and trade will definitely get affected due to the large size of the Chinese economy. He added that only a couple of sectors in India are likely to see some disruptions but alternatives are being explored to overcome those issues. Traders also will be concerned with Fitch Ratings’ report that with deceleration in growth and tight liquidity conditions, the country's financial institution sector may continue to face challenging operating environment. It said the stress in non-banking financial companies, small and medium enterprises (SMEs) and the real estate sector will continue to put asset-quality pressures on financial institutions in the country. Though, some support may come later in the day as the government approved setting up of 10,000 new farmer produce organisations (FPOs) by 2024 with budgetary support of nearly Rs 4,500 crore as part of its efforts to cut production cost and boost income of farming community. Auto stocks will be in focus with ICRA’s report that India’s automobile industry is likely to be negatively impacted and supply chain disrupted if the Coronavirus (COVID-19) outbreak in China and South-East Asia persisted longer. There will be some reaction in dairy stocks as the government increased the interest subvention or subsidy on loans given to the dairy sector from 2 per cent to 2.5 percent.

The US markets ended higher on Wednesday on signs of slowing coronavirus infections and expectations that China would take more measures to bolster its virus-hit economy. Asian markets are trading mostly in red in early deals on Thursday.

Back home, Indian equity bourses resumed their gaining rally on Wednesday, with Sensex and Nifty ending higher by over a percent each. After a fabulous opening, markets remained positive for the whole day, as the Finance Minister Nirmala Sitharaman said that the government would announce measures to tackle the financial fallout from the coronavirus outbreak amid a fall in new cases in China. Traders took some support with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that there is no reason to doubt that the government will be able to cut fiscal deficit to 3.5% of the GDP in the fiscal beginning April 1. In the second half of the trading session, key benchmarks extended their gains to settle near their day’s high points, aided with the Minister of State for Finance Anurag Singh Thakur’s statement that the government expects to resolve 90 per cent of the income tax disputes through 'Vivaad se Vishwas' scheme announced in the Budget for 2020-21. Market participants paid no heed towards a private report stating that the sharp reduction in lending rates is insufficient to prop up credit growth which is set to fall in July this year. Deterioration in factory output and real wage growth are the impeding factors limiting the growth in credit. Finally, the BSE Sensex gained 428.62 points or 1.05% to 41,323.00, while the CNX Nifty was up by 133.40 points or 1.11% to 12,125.90.
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