Market Outlook – March 23, 2020

Benchmark indices on Friday regained hope in the market by recovering after four sessions of bloodbath. Sensex ended 1627 pts higher to reach 29915 pts while Nifty ended 482 pts higher to reach at 8745 pts.

To ease volatility on Friday, SEBI imposed curbs on taking short positions in F&O segment, increased margins in the cash market and revised the position limits.

US markets are going downhill. Today morning Dow Jones was trading at 850 pts and S&P 500 futures plunged 5% to reach the lower circuit. US 10-year treasury yield fell below 1%. Goldman Sachs warns that the US economy may shrink 24% in Q2 while EU warns that this recession dur to Coronavirus may be as bad as the one in 2009.

Oil is at its worst since 1991. Brent Crude is at $26.35/b and WTI Crude is at $23.01/b.

Today’s watchlist:

1. Adani Green Energy – a Joint Venture agreement between Adani Green Energy and TOTAL Solar Singapore PTE Ltd. has been agreed which is proposed to house 2148 MWac of solar power projects.

2. Escorts – a Japanese company Kubota Corporation is going to acquire 10% stake through preferential shares of ₹ 850 each that will be issued by Escorts. But the acquisition will be on a post capital reduction basis after approval from regulators and shareholders.

3. SBI – MSMEs are now allowed to take loans upto ₹ 200 crores for 12 months at a rate of 7.25%.

4. Ashok Leyland – it will acquire only 6.99% stake instead of 19% stake in Hinduja Leyland.

5. Lupic – momentum indicator MACD shows a bullish bias for the stock. It also introduced a unique ointment used for skin treatment.

6. Inforedge – it acquired 37.9% stake in Univariety for ₹ 8 crores and 16.9% stake in Medcords for ₹ 7 crores.

7. Yes Bank – for a period of 2 years, former RBI deputy governor – R Gandhi and associate professor at SP Jain Institute of Management and Research – Ananth Narayan Gopalakrishnan are appointed as additional directors starting from March 26.

Companies going for Share Buyback:

1. Dalmia Bharat – a share buyback is approved for ₹ 500 crores through open market mechanism where the maximum price is placed at ₹ 700/share.

2. Emami – buyback of ₹ 192 crores at ₹ 300/share price.

3. Ramkrishna Forgings – ₹ 40 crores at a price of ₹ 250/share.

Due to the lockdowns announced by various state governments on the grounds of Coronavirus, a number of manufacturing plants and other operations of various companies will be shut down for a while.

Below are companies whose operations at some locations will be shut down:

1. Titan – All
2. Pokarna – All
3. Sandhar Technologies – Haryana, Rajasthan, Uttarakhand and Maharashtra
4. Shree Cement – Rajasthan
5. Whirlpool – Faridabad and Pune
6. Birla Corporation – Rajasthan and West Bengal
7. Future Retail – Almost all (will be opeerating till the permissible time in the area)
8. Graphite India
9. Maruti Suzuki – Manesar, Gurugram and Rohtak
10. Hero MotorCorp – India, Columbia, Bangladesh and Neemrana.
11. Mahindra and Mahindra – Nagpur. Will soon stop in Chakan and Mumbai.
12. Escorts – Faridabad
13. SML Isuzu – Punjab
14. Lumax Industries – All
15. TVS Motors – All
16. Eicher Motors (Royal Enfield) – All
17. JTEKT India – Gurugram, Dharuhera and Bawal
18. GNA Axles – Punjab
19. Minda Industries – All of North India, Rajasthan and Maharashtra

With international markets bearish and Indian markets bullish, it is difficult to say what comes ahead of today’s session. Brokers working from home in India while NYSE shutting its trading floor from today to allow only electronic trading are other factors to be considered.

With companies forced to shut operations due to Coronavirus, the recession is going to have a major hit on India which was already under a major slowdown. The recovery is going to take at least a year or two or even more depending upon how long Coronavirus itself lasts in India.