Deepak Jasani, Head Retail Research, HDFC Securities
Indian markets corrected further on Monday after a positive opening. It was the seventh consecutive session of losses for the Nifty. Indian equities ended lower after a last-hour selloff.
Nifty closed 69 points lower or 0.62% at 11132.75. Broad market indices like the BSE Mid Cap and Small Cap indices lost more, thereby underperforming the Sensex/Nifty. Market breadth was negative on the BSE/NSE. Sectorally, the top gainer was the BSE IT index. The top losers were the BSE Metal, Oil and Gas and Telecom indices.
Global stocks rebounded Monday on growing hopes among investors that the world's central banks will act by coordinated easing across the major central banks to help limit the economic and financial damage caused by the novel coronavirus outbreak. Bank of Japan signaled that it would inject liquidity into the financial system and hinted at increased asset purchases.
Having hit an eight-year high in January, India’s manufacturing sector growth slowed down in February as business sentiment took a hit due to concerns over the impact of COVID-19, outbreak on exports and supply chains. The manufacturing Purchasing Managers’ Index (PMI) for India declined to 54.5 in February from 55.3 in January. The reading was at 52.7 in December.
Fitch Solutions on Monday cut its forecast for India's economic growth to 4.9% in the current fiscal that ends March 31 from 5.1%, saying manufacturing could come under pressure from weak domestic demand and supply chain disruptions due to the coronavirus outbreak. The GDP growth is forecast to recover slightly to 5.4% in 2020-21 (April 2020 to March 2021) from 5.9% earlier.
Cash market turnover on NSE was higher than recent average as new cases of coronavirus in India led to reversal of gains made in early part of the day.
Technically, with the Nifty moving down further and in a free fall, traders will need to watch if the Nifty can now hold above the next major supports at 11090-11036; else the current downtrend is likely to continue. Any pullback rallies could find resistances at 11382-11433.
(Share Manthan, March 02, 2020)
