Indian Indices Continue Slump, Global Stock Market Drivers, and Top Cues in Focus Today

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On Friday, Indian share markets tumbled for the sixth straight session as global sell-off weighed on the benchmark indices, making worst weekly fall for Nifty since 2009 amid rising concern over the outbreak of Coronavirus.

At the closing bell on Friday, the BSE Sensex stood lower by 1,448 points (down 3.6%) and the NSE Nifty stood down by 414 points (down 3.6%).

All sectoral indices ended deep in the red with stocks in the IT sector and metal sector leading the losses.

Top Stocks in Action Today

Coal India share price will be in focus today as the company's dry fuel supply to the non-power sector has expanded by 4.4% till January of the current fiscal in contrast to a decline of 6.8% to the power sector for the same period.

Reportedly, the muted demand from power plants and sufficient stock of coal had resulted in lower demand.

Dr Reddy's Lab share price will also be in focus today as the company has launched the first generic version of Vimovo tablets, used to treat rheumatoid arthritis, in the US market.

The company announced the first-to-market launch of Naproxen and Esomeprazole Magnesium delayed-release tablets in the US market.

Market participants will also track Newgen Software share price.

The company has received approval from Development Commissioner of Noida Special Economic Zone (SEZ) for setting up a unit in the IT/ITES SEZ of Seaview Developers at Sector- 135, Noida in the State of Uttar Pradesh.

Global Stock Market Updates

Coronavirus panic sent global share markets crashing on Friday, compounding their worst week since the 2008 global financial crisis and bringing the wipeout in value terms to US$ 5 trillion.

The rout showed no signs of slowing as Europe's main markets slumped 3% early on and the ongoing dive for safety sent yields on US government bonds to fresh record lows.

Wall Street shares had plunged 4.4% on Thursday alone which was its largest fall since August 2011. They have now lost 12% since hitting a record high just nine days ago.

In Asia, Japan's Nikkei slumped 4.3% on rising fears that the Olympics planned in July-August may be called off due to the coronavirus.

World Health Organization Director General Tedros Adhanom Ghebreyesus said the virus could become a pandemic as the outbreak spreads to major developed economies such as Germany and France.

On the commodities front, crude oil prices languished at their lowest in more than a year having plunged 12% last week.

No Decision by Telecom Panel on Relief Efforts

The Digital Communications Commission (DCC) on Friday did not take a decision on whether telecom operators should be provided relief measures for payment of dues related to adjusted gross revenue (AGR).

The Commission, which has representatives from the department of telecommunications (DoT), ministry of finance, ministry of electronics, and information technology and NITI Aayog, met on Friday following a series of meetings between Vodafone Idea chairman Kumar Mangalam Birla and top government officials.

Birla met telecom secretary on 18 February and followed it up by meeting finance minister Nirmala Sitharaman the next day.

After last week's meetings, the finance ministry and DoT have started discussions on possible relief measures to prevent India's telecom sector from becoming a duopoly.

Meanwhile, the Cellular Operators' Association of India (COAI), a body representing the telecom industry, has urged the government to provide relief to improve the health of the telecom sector which is reeling under the adjusted gross revenue crisis.

COAI has requested that GST credits lying with the government worth Rs 400 billion be adjusted against the dues payable by telcos. It has requested that after this adjustment, the payment of balance amount of interest, penalty, and interest on penalty be allowed in a staggered manner.

As per a leading financial daily, 15 telecom entities owe the government Rs 1.47 trillion in unpaid statutory dues.

Of the estimated dues that include interest and penalty for late payments, Bharti Airtel and Vodafone Idea account for about 60%.

These dues arose after the Supreme Court, in October last year, upheld the government's position on including revenue from non-core businesses in calculating the annual Adjusted Gross Revenue (AGR) of telecom companies.

From the Mutual Funds Space...

The markets regulator has urged the mutual fund industry to build an adequate 'liquidity buffer' for debt schemes to be better prepared for any event of a crisis in future.

The regulator has also asked mutual funds to participate more in the voting process of company resolutions rather than abstain from them.

It said the ongoing credit crisis that resulted in returns of various debt mutual fund schemes taking sharp hits has brought to surface the kind of liquidity pressures that the industry could face.

Note that, last year in September, the regulator had brought in compulsory liquidity buffer in overnight and liquid funds, where in funds were mandated to invest 20% in liquid assets.

While speaking at the 14th edition of CII Mutual Fund Summit, the market regulator's whole time member G Mahalingam said MFs need to play a more constructive role when it comes to monitoring corporate governance practices followed in investee companies.

He questioned the practice of MFs staying away from casting their votes on company resolutions and pointed out that the 'abstain' votes were still as high as 12%. He directed the MF industry to reduce 'abstain' votes to 1-2% in the next few years.

He also warned the industry about mis-selling of MF products. "We don't want to be in a situation where we get complaints from investors that they were not well-informed about the risk profile of the product," he said.

The senior official told the industry to take more efforts to facilitate the growth of direct plans. He pointed out that the recent move by the regulator to allow MF investors to buy and sell units on exchanges could contribute significantly to the growth of direct plans.

What effect the above classification will have on Indian stocks remains to be seen. We will keep you updated on all the news from this space.

Speaking of mutual funds, here's what Tanushree Banerjee wrote about mutual funds in a recent edition of The 5 Minute WrapUp...

• After a few hiccups in the first half of this fiscal, strong inflows into mutual funds have taken the industry's AUM to a new high.
  
  Can we call it a saturation point?
  
  Far from it!
  
  The total AUM of India's mutual fund industry is just about 13% of India's GDP.
  
  This megatrend of financialisation of savings has a long runway ahead of it.

This is one of the megatrends that will help what Tanushree calls the Rebirth of India.

She has identified the 7 best stocks that will profit from the Rebirth of India. You can read about these top 7 stocks here.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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