Lockdown Bloodbath 2.0

Our Analysis

Covid count is on charge again in India. Lockdown situations are on. The Union Cabinet took two important decisions. First, it approved a production-linked incentive scheme for IT hardware products including laptops, tablets, personal computers (PCs) and servers. Besides, it also approved the PLI scheme for Pharmaceuticals from FY21 to FY29 to promote production of high value products in the country and increase value addition in exports.

On the global front, World shares sank on expectations for faster economic growth and inflation battered bonds and boosted commodities, while rising real yields made equity valuations look more stretched in comparison. European shares opened generally higher but world shares remained in the red after a weak Asian session, even after Fed Chair Jerome Powell pushed back against inflation fears.

This Weeks Market Highlights:

Benchmark Indices:

1) On Monday, Sensex settled at a 3-week low of 49,744 levels, down 1,145 points or 2.25 per cent. Nifty index managed to end above the 14,650-mark at 14,676, down 306 points or 2 per cent.

2) On Tuesday, Sensex closed at 49,751 levels, up 7 points or 0.01 per cent. Nifty index closed above the 14,700-mark at 14,708 levels, up 32 points or 0.22 per cent.

3) On Wednesday, Sensex zoomed to day's high during the fag-end of the session, soaring 1,130 points. The index, however, ended 1,030 points, or 2 per cent, higher at 50,782 levels. Nifty closed above the 14,950-mark, up 272 points or 1.9 per cent, at 14,982 levels.

4) On Thursday, Sensex settled the F&O series for the month of February at 51,039 levels, up 258 points or 0.5 per cent. Nifty index failed to reclaim the 15,100-mark on the closing basis and ended at 15,097 levels, up 115 points or 0.47 per cent.

5) On Friday, Sensex tumbled 2,149 points while the Nifty index slumped 629 points. The indices ended near the lowest point of the day, at 49,100 and 14,529 levels, respectively, down 1,939 points and 568 points.

Broader Index & Global Market:

- The Indian equity markets witnessed the largest selloff in recent months amid rising covid-19 cases and fears of another lockdown. All sectoral indices saw losses, with Media, IT and Realty stocks being the worst performers. Broader markets were in the red too but fared relatively better than the benchmark indices.

- World stocks jumped after U.S. Federal Reserve Chair Jerome Powell reaffirmed interest rates would stay low for a long time. In Asia, MSCI's ex-Japan Asia-Pacific shares index rose 1.5 per cent while Japan's Nikkei gained 1.7 per cent. Hong Kong's Hang Seng jumped 1.5 per cent. In Europe, the pan-European STOXX 600 index was up 0.4 per cent, London's FTSE 100 gained 0.4 per cent, while Spain's CAC advanced 0.45 per cent.

Movers & Shakers

Shares of Jagran Prakashan surged 18 per cent to Rs 57.65 in intra-day trade after the company informed the exchanges that its board would mull buyback plan during its next Board meeting on March 2.

Shares of M&M ended at Rs 806 after sliding 10 per cent in the week over profit booking along with news of price hike by auto companies and expected lockdown.

Key Market Drivers

• Coronavirus vaccine
• Lockdown
• Q3FY21

Event Watch

International:

• Coronavirus vaccine
• USA PMI, auto sales, unemployment rate
• China PMI
• UK PMI

Domestic:

• Coronavirus- vaccine
• Q3FY21
• India PMI

Stocks To Watch

National Fertilizers Ltd On Upside while, ONGC Ltd on Downside.