Asian shares, European stock index futures and Wall Street futures fell as the coronavirus pandemic and the prospect of a global recession hit investor confidence.
A day after logging healthy gains, market benchmarks the Sensex and the Nifty were back in the negative territory on April 1, tracking weak global cues.
The 30-share Sensex ended 1,203 points, or 4.08 percent, down at 28,265.31 and the Nifty settled 344 points, or 4 percent, lower at 8,253.80. The BSE Midcap and Smallcap indices remained better off than the benchmarks, down 2.18 percent and 1.06 percent, respectively.
All sectoral indices ended in the red on BSE, with the BSE Bankex, IT and Teck falling over 5 percent each.
MSCI’s defers FIF changes:
In a circular on March 31, MSCI said it will maintain the current foreign ownership limits (FOL) for Indian companies and will defer changes to the Foreign Inclusion Factors (FIF) resulting from FOL and Foreign Room changes as part of the May 2020 Semi-Annual Index Review (SAIR) and Corporate Events.
MSCI, said, it will continue to include Depositary Receipts (DRs) in calculating the FOL for Indian securities as per the MSCI Global Investable Market Indexes (GIMI) methodology.
The Indian Ministry of Finance published a circular on October 2019 raising the statutory Foreign Portfolio Investor (FPI) limit of Indian companies to the sectoral foreign investment limit, effective April 1, 2020.
While the circular raises the statutory FPI limit to the sectoral foreign investment limit, it also provides an option for companies to restrict their respective FPI limits to a lower threshold, with the approval of the company’s Board of Directors and its General Body, before March 31, 2020.
MSCI will wait for the practical implementation of these changes and the systematic publication of the new sectoral limits applicable to Indian securities before making any changes to the MSCI Indexes, said the circular by MSCI.
MSCI said it will provide further communication on the treatment of Indian FOL and Foreign Room no later than June 30, 2020.
Rising coronavirus cases
The confirmed COVID-19 cases in India rose to 1,397 on April 1, the eighth day of the lockdown. The Health Ministry has said 35 people have died due to the virus.
Globally, the infections have risen to 8.6 lakh and at least 42,300 people have died so far. The United States, Italy and Spain have registered more deaths than China, where the outbreak started. The outbreak is having a major impact on the global economy and the stock market.
Weak global cues
Asian shares, European stock index futures and Wall Street futures fell as the pandemic and the prospect of a global recession hit investor confidence.
As per Reuters, European stock index futures fell more than 3 percent on Wednesday as dismal economic data from Asia underpinned the ongoing damage from the coronavirus pandemic and fanned fears of a deep global recession.
Bank stocks plunge
Bank and financial heavyweights suffered strong losses, dragging the benchmark indices down. The Nifty Bank index cracked 4.92 percent while the Nifty Financial Services index slipped 4 percent.
Investors are worried that the disruption in economic and business activities will add to banks’ bad loans and hit their earnings and margins significantly.
Auto numbers weigh heavy
Weak auto sales numbers for March further dented the sentiment. Maruti Suzuki’s sales fell 47 percent on a yearly basis, while Eicher Motors’ total VECV sales plunged 82.7 percent YoY. Ashok Leyland’s total sales tanked 90 percent YoY.
The Nifty had formed a small bullish candle on the daily charts on March 31, as the closing was higher than the opening point.
Experts said the consolidation would continue and if the index were to surpass 8,660 on closing, then there could be a sharp upside in the coming days.
“Despite almost recording a 4 percent up move, what the candle depicted is somewhat disappointing as it took the shape of a Hanging Man formation,” Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia said.
It is critical for the Nifty to stay above 8,244 as a breach could resume the downswing with targets placed in the 8,100–7,900 zone, Mohammad said.