Indian Indices End Lower, Manufacturing Activity Amid Lockdown, and Top Cues in Focus Today

Tue, 7 Apr Pre-Open

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Indian share markets witnessed selling pressure and ended lower on Friday. Selling came as market participants were worried about the economic impact and uncertainty over the coronavirus pandemic.

Benchmark indices extended losses, as coronavirus cases continued to rise despite a complete lockdown.

Sectoral indices ended on a mixed note, with stocks in the finance sector and banking sector, leading the losses, while healthcare stocks witnessed buying interest.

At the closing bell on Friday, the BSE Sensex stood lower by 674 points (down 2.4%) and the NSE Nifty closed down by 170 points (down 2.1%).

The BSE Mid Cap index and the BSE Small Cap index ended the day down by 1.2% and 1%, respectively.

Note that stock markets around the world witnessed one of the most painful correction phases in the month of March 2020.

Indian stock markets too mirrored the trend. In the month of March 2020, the Sensex fell as much as 23%.

It is not the month where the market has fallen the most. That honor goes to October 2008 where markets tanked 23.9%, beating the 23.1% the market lost last month by a whisker.

However, March 2020 wins hands down in wealth destruction.

Wealth destruction of Rs 4.4 lakh crores back in 2008 pales in comparison to the Rs 14.6 lakh crores worth of wealth destroyed on the Sensex in the last month alone.

March 2020 the Second Worst Month in History

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Top Stocks in Focus Today

Stocks from the automobile sector will be in focus today as auto companies reported disappointing March sales numbers, largely due to the nationwide lockdown to prevent the spread of coronavirus.

Market participants will be tracking shares of Maruti Suzuki, Bajaj Auto, TVS Motors, Ashok Leyland, Hero MotoCorp, Tata Motors and Bharat Forge.

From the banking sector, IndusInd Bank will be in focus today as the lender is looking to raise as much as US$ 500-750 million confidence capital from marque global investors to soothe investor nerves frayed by worries over rising bad loans due to the coronavirus outbreak and outflow of deposits after the collapse of Yes Bank.

From the FMCG sector, market participants will be tracking ITC share price as the company is partnering with Jubilant FoodWorks, the master franchisee of the Domino's brand in India, to deliver essential commodities at the consumers doorstep.

India's Manufacturing Activity Takes a Hit

India's manufacturing activity expanded at its slowest pace in four months in March and is likely to get worse as demand and output take a hit from the coronavirus outbreak, putting a severe dent in business optimism.

A 21-day nationwide lockdown, which started on March 25 in the world's second-most populous country, is expected to deliver a heavy shock to the economy despite massive fiscal and monetary support packages by the government and the Reserve Bank of India last week.

The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, declined to 51.8 last month from February's 54.5, its lowest since November but still above the 50-mark that separates growth from contraction for a 32nd month.

A sub-index that tracks overall demand in the sector hit a four-month low as foreign demand contracted for the first time in nearly two and a half years, falling at its fastest rate since September 2013.

That was despite input and output prices increasing at their weakest in five and six months, respectively, a sign of a decline in overall inflation, which has continued to remain above the RBI's medium-term target for five months.

Lower price pressures could provide additional room for the central bank to ease policy further. It cut its key interest rates by 75 basis points and introduced a stream of unconventional measures last week.

Spike in Equity Fundraising in FY20

Data released by PRIME Database showed that financial year 2019-2020 saw a 62% jump in equity fundraising, with Rs 203.5 billion of funds raised by initial public offerings (IPOs) and Rs 512.2 billion of funds raised by already listed companies through the qualified institutional placement (QIP) route.

Overall, equity fundraising via various routes stood at Rs 916.7 billion in FY20, compared to Rs 564.9 billion in the previous financial year.

IPOs during FY20 saw strong appetite by institutional investors as well as retail investors.

QIP activity was up nearly fivefold, largely driven by issuances by Axis Bank and Bajaj Finance.

Funds mopped up through rights issues surged to Rs 560 billion.

Fundraising through public issuances of bonds saw 59% decline in FY20. As many as 35 issues raised Rs 149.9 billion, compared to 20 issues raising Rs 367.9 billion last year.

IPO activity this year is expected to see a sharp slowdown amid the coronavirus outbreak.

As many as 26 companies with approval from the markets regulator are looking to raise nearly Rs 260.6 billion from IPOs, while another six companies yet to receive nod have IPO fundraising plans of Rs 75 billion.

Stay tuned for more updates from this space.

And 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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