Market mood sours on virus, Yes Bank results

■ AT1 bonds issue, rupee may deepen FPI selling

The market outlook has again turned negative for Monday due to the rapid spread of coronavirus within the country and the consequent travel and assembling restrictions as well as developments relating to Yes Bank, which reported extremely negative financial numbers in its third quarter results.

Yes Bank further confirmed that additionaltier 1 (AT1) bonds aggregating to Rs 8,415 crore will have to be written down completely for its government-approved restructuring scheme to begin.

Existing Yes Bank shareholders also cannot sell more than 25 per cent of their shareholding if they have more than 100 shares in their demat account, this may hurt investor sentiments in the market, said analysts.

Coronavirus infection cases in Maharashtra jumped to 32 and total confirmed cases in the country stood at 109 on Sunday evening. Schools, colleges, theatres, museums, gyms and have been closed Maharashtra.

Despite a bounce back seen on Friday in the equity market, with benchmark indices Sensex and Nifty-50 gaining close to 4 per cent after a panic selling, and US market benchmark Dow Jones Industrial Average gaining over 9 per cent, market sentiments may turn negative on Dalal Street, as massive foreign portfolio investors selling, to the tune of Rs 6,027.58 crore, was witnessed on Friday.

Foreign portfolio investors have net sold equities worth Rs 24,776.36 crore in March so far, as per depositories data. They have also pulled out a net sum of pools across

Rs 13,199.54 crore from the debt segment during March 2-13.

The Indian currency, which touched an intraday low of Rs 74.49 against the US dollar on Friday and made some recovery on dollar selling by the central bank to Rs 73.92, will be keenly watched by the foreign investors, who are at risk of losing money from rupee depreciation.

The good news for India at present is that global oil consumption is in for a free-fall, heading for the biggest annual contraction in history, as more countries introduce unprecedented measures to fight the coronavirus outbreak. Brent crude oil futures at Rs 32.75 per barrel may help India in the medium-term as it pays a hefty bill on oil imports.

Analysts expect the market to remain volatile this week and accordingly, advised retail investors to be cautious.

"Markets would take a while to recover from this significant price damage. While volatility may continue in coming days, we could see intermittent relief rallies, however these are likely to be short-lived. In such times of global volatility, retail investors should keep calm and not panic," said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

"Temporary relief was seen in the global markets…Investors are still advised to be alert since the volatility, as measured by the volatility index has reached alltime highs. Sentiments around the spread of the virus will continue to drive the markets and any signs of the rate of infections falling will be a positive," said Vinod Nair, Head of Research, Geojit Financial Services.