Double whammy for stock market No takers for `3,500-cr worth Chinese goods

The market could see more selling pressure with fresh cases of coronavirus reported in India and situation getting worse in the US and Europe as well as the wider impacts of RBI initiating steps to save troubled Yes Bank.

Foreign investors resorted to heavy selling last week, offloading equity assets worth $1.4 billion. On Friday, selling by the foreign portfolio investors in the equity market was worth Rs 3,594.84 crore, as per the provisional data.

The situation around Yes Bank is still developing and analysts expect a major impact of this on the financial system in the country.

Japanese brokerage Nomura said, “If Yes Bank’s resolution resolves smoothly (there is a risk of deposit outflows when limits are withdrawn), we believe it is symptomatic of wider credit risks that still lurk in the financial system, including the telecom and power sectors and owing to the fallout of the shadow banking slowdown on real estate developers and SMEs. We expect weak growth and lagged effects of tight credit conditions to adversely impact the asset quality of both shadow banks and the banking sector in the coming quarters .... Elevated credit risks and the Covid-19 outbreak will be a growth headwind. We expect 2020 GDP growth to slow to 4.7 per cent yearon-year.”

Rating agency Crisil said, “The imposition of moratorium has material implications for companies that have been availing of various facilities and services from Yes Bank. These include current and savings account deposits, fixed deposits, working capital loan facilities, other loans, liquidity support facilities such as debt service reserve accounts and escrow accounts.”

The coronavirus scare is making consumers stay away from Chinese goods.

According to a traders body, consumers are showing an aversion towards Chinese products across different categories.

As per estimates, Holirelated Chinese goods worth about Rs 500 crore are lying with importers of Delhi, Mumbai, Bengaluru and Chennai while goods worth about Rs 3,000 crore from China are lying in the supply chain across the country, says the Confederation of All India Traders (Cait).

“Much hype has been created around coronavirus and has generated an unnecessary panic across the country. This has badly impacted Indian market and slowly the consumers are refraining from visiting markets, resulting in loss of business,” said Praveen Khandelwal, secretary general of Cait.

The consumers are totally staying away from Chinese goods due to a fear that the goods might be infected with coronavirus. Even the retail traders are not interested in procuring Chinese goods due to this shift in consumer behaviour, he added.

Many importers keep a buffer stock of 45 to 60 days. A large portion of the goods in the supply chain was imported before coronavirus broke out in early January. However, consumers are not willing to buy even the goods which were imported from China before Covid-19 broke out.

Earlier, the traders were in fear that they would run out of stocks due to import disruption from China and this could lead to price escalation in different products. However, goods other than Chinese are now become scarce and prices of some of them are skyrocketing.