What changed for D-Street while you were sleeping

NEW DELHI: A surprise 100-point rate cut by the US Federal Reserve is likely to scare than cheer investors, as it reflects fear among US policy makers about the severe impact of virus outbreak on the world’s largest economy.

Here’s breaking down the pre-market actions.

TRADE SETUP

Singapore trading sets stage for gap-down start
Nifty futures on the Singapore Exchange traded 298.75 points or 3.02 per cent lower at 9,606, indicating a gap-down start for Dalal Street.

Tech view: Nifty to move in broad range
Nifty50 on Friday settled with a solid 4.5 per cent gain after hitting the 10 per cent lower circuit limit earlier in the day. The index formed a ‘super’ Long Bullish candle on the daily chart as it swung in a massive 1,600-point range. Analysts said the index might have formed a near-term bottom at Friday’s low of 8,555. Gaurav Ratnaparkhi of Sharekhan expects the index to move in a broad range between 10,000 and 9000 levels, he said.

Asian markets drop up to 7%
Stocks were slammed on Monday and the dollar battered after emergency rate cut in the United States. US stock futures plunged 4.8 per cent to hit their down limit before daybreak in Singapore. Australia's benchmark stock index fell 7 per cent in the first quarter-hour of trade before paring some of the losses.

US Fed cuts interest rate to zero
The Federal Reserve took massive emergency action Sunday to try to help the economy withstand the coronavirus by slashing its benchmark interest rate to near zero and saying it would buy $700 billion in Treasury and mortgage bonds. The Fed's surprise announcement signaled its rising concern that the viral outbreak will depress economic growth in coming months, likely causing a recession. It cut its key rate by a full percentage point to a range between zero and 0.25 per cent.

Oil extends slide, nears $30 a barrel level
Crude Oil prices extended losses on Monday, slumping by more than $1 a barrel, as an emergency rate cut by the US Federal Reserve failed to soothe global financial markets panicked by the rapid spread of the coronavirus and mounting economic disruptions. Brent crude fell $1.83 to $32.02 a barrel by 2331 GMT, extending a plunge of over 20 per cent last week.

US stocks futures sharply down
US stock futures plunged 4.8% to hit their down limit before daybreak in Singapore following the Fed rate cut. On Friday, Dow rose 1,985 points, or 9.36 per cent, to 23,185.62, the S&P500 index gained 230.38 points, or 9.29 per cent, to 2,711.02 and the Nasdaq Composite added 673.07 points, or 9.35 per cent, to 7,874.88. All the main S&P 500 sub-indexes were trading higher, with financial stocks rising 13.23 per cent as expectations of further liquidity measures by the Federal Reserve pushed up Treasury yields, in what has become a very thin market.

FIIs sell Rs 6,027 crore worth of stocks
Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 6,027.58 crore on Friday, data available with NSE suggested. DIIs were net buyers to the tune of Rs 5,867.90 crore, data suggests.

MONEY MARKETS

Rupee: Rebounding from its record low of 74.50, the rupee traded higher by 48 paise at 73.80 against the US currency on Friday after the Reserve Bank's assurance that steps will be taken to maintain sufficient liquidity in the panick-stricken currency market.

10-year bonds: India 10-year bond yield rose 1.43 per cent to 6.32 after trading in 6.25-6.35 range.

Call rates: The overnight call money rate weighted average stood at 4.74 per cent, according to RBI data. It moved in a range of 3.50-5.15 per cent.

HAPPENING TODAY

• India WPI Inflation for Feb
• China Jan-Feb Industrial Output
• Eurogroup Meeting
• China Feb House Price Index
• China Jan-Feb Retail Sales

MACROS

RBI rate cut may come sooner than expected
India’s central bank is likely to reduce its benchmark repo rate sooner than previously expected even as it follows up last week’s $2-billion swap auction with more timely and immediate measures to ensure adequate system liquidity through the current crisis, reports ET. Although Mint Road is not part of the global swap lines facility from the Federal Reserve, the central bank may join the rest of the emerging central banks in a coordinated attempt to avoid a financial markets freeze.

Panic shopping begins in retail mart
Ecommerce platforms, retail chains and kirana stores reported a sharp surge in sales of staples, daily necessities and personal hygiene products in the past few days as panic buying took hold across India amid the fear of closures as Covid-19 cases rise. Deliveries have been delayed and some items such as sanitisers have gone off shelves or are unavailable online. Retailers and FMCG companies said there are no shortages and that they will speed up supplies to shops besides seeking to curb hoarding. They said sales are up 15-45% in various categories.

India Inc slows down hiring
India Inc is going slow on fresh recruitment, opting to fill up only necessary and critical positions, with the Covid-19 bug turning into a pandemic and the Indian economy caught in a prolonged slowdown. HR heads of various corporates ET spoke with said overall recruitment levels are very likely to drop with business slowing down globally on account of Covid-19 and restrictions on travel even as companies are monitoring the situation closely.

IT firms seek client waivers to work from home
Indian IT companies have asked their clients for waivers to let employees on projects work from home and are testing their systems, a key requirement before they can implement any widespread measure to allow their lakhs of employees to stay home. Business continuity plans typically allow a subset of employees to work from home, with work also getting distributed to other cities as employees travel between them.

TV, fridge prices set to shoot up
Prices of television, refrigerator and washing machine are set to go up due to steep depreciation of the rupee against the dollar, two senior industry executives said. Smartphone makers such as Xiaomi, Vivo and OnePlus plan to absorb the exchange rate impact as of now, with the industry fearing a slide in sales since prices are all set to go up due to increase in goods and services tax on smartphones to 18% from 12%. But they will factor the exchange rate in the pricing of future launches, the executives said.

Modi proposes emergency Covid-19 fund for Saarc
Convening a special meeting of SAARC leaders over a videoconference, Prime Minister Narendra Modi, reiterated Indian efforts to counter the novel coronavirus. 'Prepare, but don't panic' has been India's mantra to fight the deadly virus, said Modi. India pledged $10 million toward a Covid-19 emergency fund and said it was putting together a rapid response team of doctors and specialists for South Asian Association for Regional Cooperation (Saarc) nations. The conference included leaders of seven countries — Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Sri Lanka — and the special adviser (Health) to the Pakistan Prime Minister.

3 sectors to be badly hit by Coronavirus
Construction, transport and chemical manufacturing sectors are likely to be the worst-affected by the coronavirus pandemic in China. However, India's top imports -- crude oil and gems and jewellery -- which collectively account for 46 per cent of total imports are relatively insulated from the public health crisis in China, according to a report by ICICI Securities. Out of India's total imports of $507 billion in FY19, 26% of the basket, comprising iron and steel and inorganic chemicals, is likely to be affected modestly.

EGoM may be set up for telecom relief
The government is considering setting up an empowered group of ministers (eGoM) to oversee steps to tide over the adjusted gross revenue (AGR) crisis in the telecom sector, reports ET. The eGoM will look at ways to lower levies such as licence fees and spectrum usage charge (SUC) to help retain a three-private player market, as well as attract investments from new players. The government is also likely to request the Supreme Court to allow affected telcos to stagger payment of AGR liabilities over up to 20 years on net present value basis, at a reduced interest rate of 8%.

J&K statehood to be restored soon: Shah
Assurances of restoration of statehood at "early opportunity", no demographic change and release of all political prisoners in "due course" were the takeaways from Union Home Minister Amit Shah's meeting with a political delegation of the Jammu and Kashmir Apni Party in New Delhi on Sunday. The home minister also assured the delegation that the NDA government under Prime Minister Narendra Modi will take steps for the overall development of Jammu and Kashmir.

Recession risk calls for joint response: UN chief
UN chief Antonio Guterres on Sunday urged governments to work together to stop the coronavirus pandemic from plunging the global economy into recession. "No country can face it alone," the secretary general wrote in an opinion article in the Publico daily. The International Monetary Fund, which releases its updated outlook on the world economy next month, has said that the severity of the slowdown will depend on how long the virus outbreak lasts and how governments respond. IHS Markit, an economics research firm, this week slashed its forecast for global growth to 1.7%.

Big US banks halt stock buybacks; to lend to virus-hit businesses
The United States’ biggest banks will stop buying back their own shares, and will instead use that capital to lend to individuals and businesses affected by the coronavirus, an industry trade group said on Sunday. The Financial Services Forum said its eight members - JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Wells Fargo & Co, Goldman Sachs Group Inc, Morgan Stanley, Bank of New York Mellon Corp and State Street Corp - would each halt share repurchases through June 30.