Coronavirus, global sell-off moved markets this week; watch out SBI Cards IPO, RITES OFS next week

SBI Cards and Payment Services IPO would be keenly watched by the investors next week as it opens on March 2 for the subscription.

Domestic equity market indices Sensex and Nifty continued to lose for the sixth consecutive session on Friday as concerns over coronavirus spurt economic uncertainty. S&P BSE Sensex ended 1448 points or 3.64 per cent lower at 38,297 points while, broader Nifty 50 index, slipped below the crucial 11,300 mark, to close at 11,209, down 414 points or 3.56 per cent. Along with coronavirus fears, the major triggers that impacted markets were heavy selling by foreign institutional investors (FIIs), global sell-off and release of India’s GDP numbers for December quarter.

India’s GDP growth at 4.7%- India’s economy grew at 4.7 per cent on-year in the third quarter of the current fiscal. In the first quarter of the current fiscal, the GDP grew at 5 per cent, following a growth rate of 4.5 per cent in the next quarter, which was over 6-year low. ” Markets may have fallen on the coronavirus scare but it may be worthwhile pondering on the direct relationship between GDP growth and earnings growth to understand whether the markets have run ahead of the earnings trajectory, at least for some time now. The economy, probably, is gradually bottoming out, at least it looks like that,” Joseph Thomas, Head of Research – Emkay Wealth Management said.

Coronavirus fears- On Friday, countries on three continents reported their first cases of the coronavirus as the world prepared for a pandemic and investors dumped equities in expectation of a global recession. A total of 327 new cases were reported from mainland China, totaling it to over 78,800 cases with almost 2,800 deaths, as per the Reuters news report. “It is difficult to predict the extent and impact of Coronavirus, therefore, it is becoming a black swan event for the market and the market doesn’t like uncertainty,” Santosh Meena, Senior Analyst, TradingBells said.

Global markets roil- US stocks plunged for a seventh straight day on Friday amid coronavirus outbreak. The Dow and the Nasdaq also registered their deepest weekly percentage losses since October 2008. The Nasdaq eked out an 0.01 per cent gain after plunging as much as 3.5 per cent during the session. After falling as much as 4.2 per cent – more than 1,000 points – the Dow ended the day down 1.4 per cent. In Asian markets, MSCI’s regional index excluding Japan shed 2.7 per cent. Japan’s Nikkei slumped 4.3 per cent on rising fears the Olympics planned in July-August may be called off due to the coronavirus.

Valuations at reasonable levels- Market watchers see valuations at reasonable levels. “When the entire world is blaming coronavirus for the fall, we feel that valuations have a big part to play in this bearishness. Due to the valuations being at reasonable levels, despite the epidemic, markets improved,”Umesh Mehta, Head of Research, Samco Securities said. He further added saying that India is currently experiencing a similar yet opposite scenario.

The week ahead- Analysts believe that for the week ahead, the number of coronavirus cases and how it can be dealt with will decide the movement of the market. “The numbers, regarding the spread of the disease, and how far it can be contained will drive the markets next week. Measures by governments to boost respective economies will also be watched out for, post the Chinese government’s support to bolster the economy,” Vinod Nair, Head of Research at Geojit Financial Services said.

SBI Cards IPO next week- SBI Cards and Payment Services IPO would be keenly watched by the investors next week as it opens on March 2 for the subscription. The bidding process will be closed on March 5, 2020. “All eyes would be glued on the most awaited SBI Cards IPO and RITES OFS by the Government of India. No matter the outcome, markets would broadly be driven by the virus and global sentiment. Investors should cherry-pick quality stocks in a staggered manner as every dip seems to be a good buying opportunity. Nifty closed the week at 11201.75, down by 7.3%,” Jimeet Modi added

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