The markets are likely to have a weak opening as the world struggles to grapple with the Covid 19 contagion. India has taken some drastic measures, including a lockdown in 81 districts and cancellation of passenger train and inter-state bus services, as number of cases edged close to the 400 mark. There was little to cheer outside India as the global death toll due to coronavirus exceeded 14,000 and infections climbed beyond 300,000.
The trends on SGX Nifty indicate a negative opening for the index in India, with a 1,038 points loss. The Nifty futures were trading at 7,738, lower by 11 per cent, on the Singaporean Exchange around 8:30 am. Asian shares slid on Monday as more countries shut down in the fight against the coronavirus, threatening to overwhelm policymakers’ frantic efforts to cushion what is clear to be a deep global recession. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 2 per cent, with South Korea badly hit. Japan’s Nikkei added 0.8 per cent, perhaps aided by expectations of more asset buying by the Bank of Japan, but the commodity-heavy Australian market shed 5 per cent.
The measures announced by Sebi such as restricting short selling is also likely to lead to a knee-jerk reaction among the market participants. The market regulator Sebi halved position limits for certain stock futures, restricted short-selling of index derivatives and raised margin rates for some shares in a bid to curb “abnormally high” volatility amid the coronavirus pandemic. Those measures came soon after global markets plummeted as emptying hotels and airports, and the closure of malls and offices threatened to bring the world’s economies to a grinding halt.
On Friday, Wall Street retreated on Friday after New York ordered residents to stay home, rattling investors who had welcomed this week’s fiscal and monetary measures to counter the coronavirus shock and help revive the safe-haven appeal of bonds and gold. Dow Jones fell 913.21 points, or 4.55 per cent, to 19,173.98. The S&P 500 lost 104.47 points, or 4.34 per cent, to 2,304.92 and Nasdaq Composite dropped 271.06 points, or 3.79 per cent, to 6,879.52.
Meanwhile, the Reserve Bank of India announced fresh bond purchases worth Rs 10,000 crore via open market operations, in a bid to ensure liquidity and stability across market segments. And RBI Governor Shaktikanta Das said, last week, that RBI has several policy instruments and tools that it can deploy as required and interest rate action would be based on the “evolving situation.”
The government announced the establishment of a special task-force to shield the economic activity in the country from the coronavirus outbreak.
There is bleak news on the corporate front, with automobile manufacturers such as Maruti Suzuki India, Tata Motors and Mahindra & Mahindra suspending car production in wakwe of the coronavirus outbreak.
The BSE Sensex and Nifty cracked more than 12 per cent last week, the biggest weekly loss since October 2008, the height of the global financial crisis. The benchmark indices have already fallen by around 30 per cent since the peak hit in mid-February and still seem to be nowhere near the bottom.